TMI Tax Updates - e-Newsletter
September 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Input tax credit (ITC) - As the commercial production of exempted goods did not begin in 2018-19, the entire input tax on input services, subject to the provisions under rule 42(2) of the GST Rules, is an admissible credit during 2018-19. - AAR
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GST:
Input tax credit (ITC) - the assessee is required to compute the admissible amount of the input tax credit on the capital goods used for both taxable and exempt supplies in the tax periods over the useful life of such capital goods, calculated from the date of invoice. - AAR
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GST:
Exemption of GST - providing services to Government of Mizoram, as a Financial Management Specialist and Institutional Development Specialist - The Applicant is, therefore, providing pure service to the State Government in relation to a project that involves functions listed under Entry 4 of the Twelfth Schedule - AAR
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Income Tax:
Expenses incurred for the preoperative period towards the project development cost - the treatment given in the books of account by the assessee would not be conclusive in income tax proceedings to decide whether the expenditure was revenue or capital - Order of ITAT allowing as revenue expenditure upheld. - HC
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Income Tax:
Levy of fee u/s 234E - Late filing of TDS returns - no fee was leviable to the assessee u/ s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay.
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Income Tax:
Set off of unabsorbed depreciation against Income from House Property and Income from Other Sources - the ‘set off’ of the ‘unabsorbed depreciation’ cannot be bridled with a condition that the business should be continued by the assessee in the said year
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Income Tax:
Rate of depreciation - nature of assets - Colour solution machines, have rightly been classified as plant and machinery by the DRP. It correctly held that these are operational tools and cannot be called furniture
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Income Tax:
Bogus LTCG - Penny stock transaction - denying exemption u/s. 10(38) - This is a classic case of penny stock transaction. Such conversion of unaccounted money through dubious method is not permitted.
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Income Tax:
Admission of additional evidences under rule 46A by the CIT(A) - whether in earlier years the declared income of the assessee have been accepted in framing assessment U/s 143(3) of I.T. Act, or not; is an entirely irrelevant consideration for the purpose of admission of Additional Evidences.
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Income Tax:
Capital gain on asset sold - LTCG OR STCG - period of holding - merely because there is a change in the nature of immovable property, the principles of determining date of acquisition cannot change
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Income Tax:
TDS u/s 194C or 194I - Expenses on Advertising and Exhibition - space is allotted to the assessee for carrying-out its business activities. Thus, a property for a limited time have been rented out to the assessee - TDS. liable to be deducted u/s 194I
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Income Tax:
Validity of order passed u/s 201(1) & 201(1A) - period of limitation - TDS u/s 195 - order u/s 201(1) & 201(1A) r.w.s 195 for A.Y 2007-08 in the case of the assessee before us could have been passed latest by 31.03.2011, and not thereafter.
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Income Tax:
Disallowance u/s 36(l)(vii) r.w.s. 36(2) - bad debts written off in the P & L account - Writing off of sums which represent money lent in the ordinary course of business is allowed as deduction.
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Income Tax:
Bogus LTCG - exemption claimed u/s 10(38) denied - No evidence of actual sale except the contract notes issued by the share broker were produced by the assessee. No question of law, therefore arises - additions confirmed - HC
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Income Tax:
LTCG - Characterization of income - Benefit of exemption - as the assessee has entered into multiple transactions for various listed Companies, it was a regular feature of the assessee to trade in shares to obtain short term gain and, therefore, the short term gain has rightly been included as business adventure and has rightly been included in the income of the assessee. - HC
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Customs:
Imposition of Penalty - Once the value has been found misdeclared the goods become liable for confiscation under Section 111(m) of the Customs Act, 1962 and the person misdeclaring or abetting in such misdeclaration is liable to penalty u/s 112(a).
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Customs:
Appropriation of the amount said to be deposited voluntarily by the importer - by issuing the show cause notice, Revenue has itself opted not to settle the issue in terms of sub-section 2B of Section 28 of Customs Act, 1962. Having done so they cannot go back subsequently on failing in adjudication proceedings to ask for settlement and appropriation of the amounts paid in terms of this section.
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Customs:
Irregular imports - In the present case the goods were seized and then provisionally released. After provisional release of the goods they have been re-exported. In such as situation the goods are liable for confiscation.
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IBC:
Winding up petition - time limitation - recovery of dues - A suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding up proceeding - Winding up Petition filed beyond the period of three-years mentioned in Article 137 of the Limitation Act is time-barred, and cannot therefore be proceeded with any further. - SC
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IBC:
Initiation of CIRP - Petition u/s 7 of the I&B Code is to be considered by the Adjudicating Authority on its own merits taking into consideration the records and in absence of any evidence to show that the State Bank of India filed the application only because of the ‘Circular’ issued by Reserve Bank of India, it was not open to the Adjudicating Authority to reject the application.
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Wealth-tax:
Non filing of return of wealth - Penalty levied u/s 18(1)(c) of the Wealth Tax Act - third member confirms that, penalty be imposed against the assessee.
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Service Tax:
Works contract service - Site Formation and Clearance, Excavation, Earthmoving and Demolition Service - the contract being indivisible, no Service Tax can be levied upon the appellants before 01.06.2007.
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Central Excise:
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - certain clarifications on the Scheme
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Central Excise:
Refund of CENVAT Credit - Duty drawback claimed for export goods - since the drawback scheme itself has provided for a single rate of drawback, which, according to the clarification in the Notification 110/2015-CUS dated 16.11.2015, means only customs duty drawback, it is impossible that the respondents could have availed drawback of central excise duty.
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Central Excise:
Requirement with the pre-deposit - Section 35F The prayer of the petitioner for being permitted to prosecute its appeal before the CESTAT without complying with the condition of mandatory pre-deposit, cannot be granted - HC
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VAT:
Taxable event in case of ‘Central Excise’ and ‘Sales Tax’ is different. While ‘manufacture’ is the event in case of Central Excise; the taxable event in the case of VAT is ‘sale’. - The “Facility Charge” levied by the petitioner company is towards consideration of sale of gases and is exigible to value added tax - HC
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VAT:
Vires of Section 33 of HVAT Act 2003 - declaration of 'C' Forms - At the time of arguments, realising that vires cannot be challenged in appeal, learned counsel for appellant prays for permission to withdraw present appeal to enable his client to file writ petition. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (9) TMI 1120
Input tax credit - capital goods and input services that are common to the production of both taxable and exempted goods - extent and proportion the input tax credit is admissible on such capital goods and input services - HELD THAT:- In the Applicant s case, the commercial production of taxable goods started in December 2018. The commercial production of the exempt goods did not begin in 2018-19. The value of D1f therefore, is zero during the tax periods in 2018-19. No amount of the common credit of input tax on input services available during 2018-19 should, therefore, be attributed towards exempt supplies. In other words, subject to the provisions under rule 42(2) of the GST Rules, the entire input tax on input services is an admissible credit during 2018-19 - It is presumed that the Applicant does not make any exempt supplies other than the ones it manufactures. Based on the proviso to rule 43(1)(d) of the GST Rules and further prescriptions under rule 43(1)(e), (f) and (g) of the GST Rules, the Applicant is required to compute the admissible amount of the input tax credit on the capital goods used for both taxable and exempt supplies in the tax periods over the useful life of such capital goods, calculated from the date of invoice. The Applicant shall reverse the balance amount of the input tax on the said capital goods that has already been credited to its electronic credit ledger - As the commercial production of exempted goods did not begin in 2018-19, the entire input tax on input services, subject to the provisions under rule 42(2) of the GST Rules, is an admissible credit during 2018-19.
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2019 (9) TMI 1100
Exemption of GST - providing services to Government of Mizoram, as a Financial Management Specialist and Institutional Development Specialist - Inter-state supply - HELD THAT:- The Applicant is required to support the Water Resources Department in implementing the Climate Adaptation in Vennar Sub-basin in Cauvery Delta Project . The project aims at improving water management in the Vennar System. The expected outputs are improved flood risk management and up-gradation of irrigation infrastructure. Seven consultants, including the Applicant have been engaged for supporting the PMU in implementing the project - Entry 3 of the Eleventh Schedule of the Constitution includes minor irrigation, water management and watershed development. The Applicant is, therefore, providing pure service to the State Government in relation to a project that involves functions listed under Entry 3 of the Eleventh Schedule. The Applicant s service to the Government of Tamilnadu is, therefore, eligible for exemption under Sl.No. 3 of the Exemption notification. Entry 13 of the Eleventh Schedule lists roads, culverts, bridges, ferries, waterways, and other means of communication. But Art 243M (2) states that the Part of the Constitution containing provisions on Panchayats, including Art 243G, does not apply to Mizoram. However, Entry 4 of the Twelfth Schedule and Entry 4 of the Mizoram Municipalities Act, 2007 include roads and bridges. Improvement, construction and modernisation of roads is, therefore, a function entrusted to a Municipality under Art 243 W of the Constitution. The Applicant is, therefore, providing pure service to the State Government in relation to a project that involves functions listed under Entry 4 of the Twelfth Schedule. The Applicant s service to the Government of Mizoram is, therefore, eligible for exemption under Sl.No. 3 of the Exemption notification.
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2019 (9) TMI 1097
Service of notice - Form GST MOV 10 - section 130 of the CGST Act, 2017 - HELD THAT:- Mr. Trupesh Kathiriya, learned Assistant Government Pleader to ensure that a copy of the notice issued in Form GST MOV 10 shall be duly furnished to the learned advocate for the petitioner forthwith, today - the petitioner is required to remain present before the respondent authority on 25.09.2019. Stand over to 26th September 2019 .
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2019 (9) TMI 1096
Release of seized goods alongwith the truck - petitioner submitted that the petitioner has already paid the amount of tax and penalty as computed by them - HELD THAT:- By way of interim relief, the respondents are directed to release the Truck No. KA-14-B-6847 along with the goods contained therein subject to the petitioner paying the differential amount of tax and penalty between the amount paid by the petitioner and the amount computed by the respondents under section 129 of the Central/Gujarat Goods and Services Tax Act, 2017.
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2019 (9) TMI 1092
Detention of goods - undervaluation of an invoice - Section 129 of the CGST Act - HELD THAT:- Considering the valuation report dated 30.08.2019 which does not inspire any confidence, issue Notice , returnable on 3rd October 2019 .
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2019 (9) TMI 1091
Detention of goods - undervaluation of an invoice - section 129 of the CGST Act - HELD THAT:- Considering the valuation report dated 30.08.2019 which does not inspire any confidence, issue Notice, returnable on 3rd October 2019.
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2019 (9) TMI 1086
Constitutional validity of Section 174 of the Kerala Goods and Service Tax Act - time limitation - HELD THAT:- Since the grounds raised in the writ petition, other than one relating to the constitutional validity of Section 174 of KSGST Act, were not considered by the learned Single Judge, we think it appropriate to remit the matter for a fresh consideration and disposal by the Single Judge, on the questions other than those relating to validity of Section 174 of the KSGST Act. The writ petition is restored on the files of this court for fresh consideration an disposal by the Single Judge.
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2019 (9) TMI 1081
Imposition of penalty - mis-declaration of goods - evasion of tax - exparte order - non appearance before the appellate authority - HELD THAT:- While rejecting the appeal, the 3rd respondent does not have jurisdiction to record findings on merits by referring to the memorandum of grounds. She prays for setting aside Ext.P5 order and requests resubmission of Ext.P2 appeal after curing the defects noted or by giving suitable reply as is permissible in law - The petitioner is also given liberty to make good the deficiency of Kerala Legal Benefit Fund while re-submitting Ext.P2 appeal. The order is set aside - petition disposed off.
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Income Tax
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2019 (9) TMI 1119
Expenses incurred for the preoperative period towards the project development cost - capital expenditure OR revenue expenditure - HELD THAT:- Expenditure incurred for setting up new stores has been claimed as revenue expenditure to the extent the expenditure was revenue in nature and where capital expenditure was incurred, the same was not claimed as revenue expenditure. However, the Respondent in its books of accounts showed the entire expenditure i.e. even the expenditure which is claimed in the income tax return as revenue expenditure as capital expenditure. It was only on the above basis, AO and the CIT (Appeals) held that the revenue expenditure claimed by the Respondent in its return of income could not be allowed. Tribunal allowed the Respondent s appeal, inter alia, pointing out that the treatment given in the books of account by the assessee would not be conclusive in income tax proceedings to decide whether the expenditure was revenue or capital. In support of its view, the Tribunal relied upon the decision of the Supreme Court in the case of Taparia Tools Ltd. v. JCIT [ 2015 (3) TMI 853 - SUPREME COURT ] The Tribunal also relied upon upon the judgment of its Coordinate Bench in the case of Reliance Footprint Ltd. v. ACIT [ 2013 (12) TMI 161 - ITAT MUMBAI ] for the assessment year 2008-09, on identical facts, holding that the revenue expenditure as claimed is allowable.
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2019 (9) TMI 1118
Certificate for deduction at lower rate u/s 197 - Petitioner make its plea for nil/lower deduction for consideration by the appropriate Authorities - HELD THAT:- Learned counsel for the petitioner on its behalf states that it will file its request before the authorities within two weeks. It is permitted to do so. Such request, if made before the Authorities concerned, within two weeks from today will be considered after hearing the petitioner union and decided in accordance with law within a period of six (6) weeks from date of conclusion of personal hearing in any event on or before 15th of November 2019. This Court, vide an interim order dated 13.06.2011 has extended until further orders an injunction granted on 29.03.2011 restraining the banks from deducting tax at source until further orders. The Court has also noticed that in such cases where the deduction was not effected, then the respondents are restrained from effecting the same and in cases where the deductions have been effected amounts equal to tax shall not be disbursed and shall be retained in the custody of the bank itself. In the light of the fact that the injunction has been in force since 2011, the same shall continue till the disposal of the representation to be filed by the petitioner or till the 15th of November, 2019 whichever is earlier.
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2019 (9) TMI 1117
Levy of fee u/s 234E - Late filing of TDS returns - demand has been raised by the department u/s 200 in terms of failure to comply with section 200A which deals with the processing of statement of tax deducted at source u/s 200 - HELD THAT:- In this case the demand has been raised purely on the ground that statement has not been furnished for the tax deduction at source. The relevant provision of section 200(3) read with rule 31A (4A) only refers to filing of 'challan cum statement' after the tax has been paid. The word challan in the said rule indicates that the tax must stand paid and that is how form 26QB is generated. Thus, here in this case, it cannot be held that there is any violation of section 200(3). In any case, the levy of fee vi] s 200A in accordance with the provision of section 234E has come into the statute w.e.f. 1.6.2015. Since the challan and statement has been filed much prior to this date, therefore, no such tax can be levied u/s 200A. Nowhere in the judgments Hon'ble Courts have held Fees u/s 200A read with section 234E shall be levied prior to 1.06.2105, because prior to this date has not prescribed levy of fees u/s 200A. Thus, we hold that no fee was leviable to the assessee u/ s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay. Accordingly, the demand on account of 234E is cancelled. Accordingly the appeal of the assessee is allowed.
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2019 (9) TMI 1116
Disallowance of foreign exchange fluctuation loss arising out of re-statement of External Commercial Borrowings (ECB) at the year end rates in accordance with Accounting Standard 11 (AS-11) prescribed by the Institute of Chartered Accountants of India (ICAI) - disallowance of foreign exchange loss above by holding that it is capital expenditure and cannot be allowed as deduction u/s.37(1) - HELD THAT:- This issue is also squarely covered by the decision of Hon ble Supreme Court in the case of Woodward Governor India Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] wherein, among other aspects, it was also held that compliance to AS-11 of ICAI is mandatory for all companies registered in India. ECB has been utilized for purchase of capital assets in India by the assessee company. Thereafter, any change in the ECB value due to exchange fluctuation would not alter the cost of fixed assets. Reliance in this regard is placed on the decision in the case of Tata Iron and Steel Company Ltd. [ 1997 (12) TMI 5 - SUPREME COURT ] Hence, it could be safely concluded that exchange loss has got absolutely no bearing / link with the cost of fixed asset. In that scenario, the only alternative is to treat the said loss as loss incurred on the revenue field and hence, to be allowed as revenue expenditure. In view of the aforesaid observations, we find that the decisions relied upon by the revenue are not at all applicable to the facts of the instant case and the decisions relied upon by us herein supra hereinabove would rule the field. Hence, we hold that the assessee deserves to be granted deduction towards foreign exchange fluctuation loss for more than one reason as detailed hereinabove. Accordingly, the grounds raised by the assessee are allowed.
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2019 (9) TMI 1090
Characterization of income - Benefit of exemption for long term capital gain - AO while passing an order accepted the assessed long term capital gain derived as a result of sale of shares but treated the short term capital gain derived from purchase and sale of shares as income from business only - HELD THAT:- Tribunal, thus, keeping in view the number of frequency of transaction has rightly arrived at a conclusion that the Assessing Officer was justified in giving the benefit of exemption for long term capital gain and was also justified in treating the income as business income in respect of purchase / sale of shares No substantial question of law arises in the present appeal. The frequency of transaction carried out during the year shows that approximately 288 transactions took place for the purchase of equity shares through out the year and about 162 transactions of sale have been entered with various share brokers including Arihant Capital; JM Finance P. Ltd., etc., and, therefore, as the assessee has entered into multiple transactions for various listed Companies, it was a regular feature of the assessee to trade in shares to obtain short term gain and, therefore, the short term gain has rightly been included as business adventure and has rightly been included in the income of the assessee. It is purely a finding of fact arrived at by the Assessing Officer as well as by the Income Tax Appellate Tribunal. No substantial question of law arises in the present appeal.
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2019 (9) TMI 1089
Bogus LTCG - exemption claimed u/s 10 (38) denied - No evidence of actual sale - HELD THAT:- Tribunal has in depth analyzed the balance sheets and the profit and loss accounts of Cressanda Solutions Ltd. which shows that the astronomical increase in the share price of the said company which led to returns of 491% for the Appellant, was completely unjustified. Pertinently, the EPS of the said company was ₹ 0.01/- as in March 2016, it was ₹ 0.01/- as in March 2015 and -0.48/- as in March 2014. Similarly, the other financials parameters of the said company cannot justify the price in excess of ₹ 500/- at which the Appellant claims to have sold the said shares to obtain the Long Terms Capital Gains. It is not explained as to why anyone would purchase the said shares at such high price. Cressanda Solutions Ltd. was in fact identified by the Bombay Stock Exchange as a penny stock being used for obtaining bogus Long Term Capital Gain. No evidence of actual sale except the contract notes issued by the share broker were produced by the assessee. No question of law, therefore arises in the present case and the consistent finding of fact returned against the Appellant are based on evidence on record. - Decided against assessee.
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2019 (9) TMI 1085
Reopening of assessment u/s 147 - validity of reasons to believe - change of opinion - payment of Technical Know-How Fee - HELD THAT:- Payment of Technical Know-How Fee is concerned, it is clear from the records that the said issue was considered not only by the Assessing Authority but, by the Transfer Pricing Officer also alongwith other expenditure incurred by the Assessee and it was found that it falls within the domain of international transactions as found by the Transfer Pricing Officer and the T.P. Adjustment was arrived by the Transfer Pricing Officer which was included by the Assessing Authority while passing the Assessment Order under Section 143(3) of the Act. Reassessment proceedings undertaken by the Assessing Authority to disallow the said expenditure fully by holding it to be only adding as intangible asset falling falling within the domain of Section 32(1)(ii) of the Act and allowing only 25% depreciation thereon is nothing but a mere change of opinion by the Assessing Authority. Reassessment under the provisions of Sections 147 and 148 is not permissible on a mere change of opinion. The Assessing Authority, in order to invoke the reassessment proceedings under Section 147/148, has to record reasons to believe about escapement of income in the hands of the Assessee. The parameters of powers under Section 147/148 have been discussed by the Apex Court and various High Courts in a large number of decisions and the latest in the series being in the case of CIT v. Kelvinator of India Ltd. ( 2010 (1) TMI 11 - SUPREME COURT ) which has been relied upon by the learned Tribunal to quash the reassessment in the present case - reassessment in the circumstances of the case was done merely based on a change of opinion at a subsequent stage and it was not permissible and set aside the same - Decided in favour of assessee.
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2019 (9) TMI 1080
Addition on account of unexplained loan - addition u/s 68 - HELD THAT:- Since the deal could not be materialized, the assessee returned the amount in question in subsequent year. All the transactions are carried out through banking channel and no defects in the books of account have been pointed out. All the creditors are assessed to tax and have disclosed the transactions to the Income Tax Department. The assessee explained that since parties are not in his direct control, therefore, direct enquiry may be made from the creditors, for which, assessee also deposited fees as required for the same. However, no attempt have been made to verify the transactions from the creditors. Since all the creditors were assessed to tax and their PAN were available to the A.O, therefore, A.O. could have examine the source of their income from the income tax record. But the A.O. did not do anything in the matter. Decision of the Hon ble Supreme Court in the case of Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME COURT] would apply. The assessee in these circumstances is able to discharge onus upon it to prove the ingredients of Section 68 . No material has been brought on record that the credit amount introduced by the creditors was actually emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee - when it is explained that trading advances were received and when the material could not be supplied, amounts have been returned in subsequent year, same could not be disputed by the authorities below to treat the same as undisclosed income of the assessee - Decided in favour of assessee.
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2019 (9) TMI 1079
TDS u/s 194C or 194I - Expenses on Advertising and Exhibition - demand under section 201(1)/201(1A) - HELD THAT:- The basic evidence to prove the contention of assessee was contract between assessee and the organisers, which assessee failed to produce before A.O. CIT(A) rejected the request for admission of the additional evidences. Whatever contention have been raised by the assessee, have not been substantiated through any evidence or material on record. Therefore, stand proved that assessee paid the amount in question to the Jewellery Market Exhibition for giving stall for exhibition. Thus, space is allotted to the assessee for carrying-out its business activities. Thus, a property for a limited time have been rented out to the assessee. Thus, the assessee were liable to deduct TDS under section 194-I - In the absence of any evidence on record, no interference is called for in the matter. The assessee, lastly relied upon Judgment of Hon ble Supreme Court in the case of M/s. Japan Airlines Company Ltd., vs., CIT, New Delhi [ 2015 (8) TMI 185 - SUPREME COURT ]. TDS u/s 194C - reimbursements of expenses or not - addition under the Head Printing and Stationery - HELD THAT:- CIT(A) specifically found that assessee has claimed these expenditure in its books of account. It was further found that the payment is shown in the name of M/s. Balaji and M/s. Allshreshtha who have provided the services to the assessee and not in the name of the customers. The finding of fact recorded by the Ld. CIT(A) have not been rebutted by the assessee in any manner. Therefore, contention of assessee that it was reimbursement of expenses is without any basis. The assessee was, thus, liable to deduct TDS under section 194C of the I.T. Act, 1961 on such payments.
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2019 (9) TMI 1078
Capital gain on asset sold - LTCG OR STCG - period of holding - HELD THAT:- The above issue is clearly covered in favour of the assessee by the decision of the Hon‟ble Bombay High Court [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] which says by considering Circular No. 471 dated 15.10.1986 that date of acquisition of the asset shall be considered when the letter of allotment was issued. No doubt the impugned asset in that decision was a residential asset whereas, in the present case it is plot of land. However, merely because there is a change in the nature of immovable property, the principles of determining date of acquisition cannot change. In view of this we direct the ld AO to consider the date of allotment on 31.05.2002 as the date of acquisition of the impugned asset. Thus what is transferred by the assessee is a long term capital assets and not a short term capital assets. The impugned profit or gain on sale of the above asset shall be considered as long-term capital gain. Thus, findings of lower authorities are reversed. Accordingly, ground No. 1 and 2 of the appeal are allowed. Denial of deduction u/s 54F - reason for rejection was that the property has been registered in the name of the assessee only, however, the payment towards the installments have been made to HUDA from the accounts of the parents of the assessee - HELD THAT:- CIT(A) has clearly held that as the impugned asset sold is a short term capital asset there is no benefit of provision of section 54 and 54F is available to the assessee. However, as we have already held that impugned asset is a long term capital asset and the capital gain earned by the assessee is a long term capital gain and therefore, now the assessee after all other conditions are satisfied is eligible for claim of deduction u/s 54/54F of the Act. Therefore, we set aside ground No. 3 of the appeal to the file of the ld CIT(A) with a direction to decide about the claim of the assessee. Accordingly, ground No. 3 of the appeal is restored back to the file of the ld CIT(A).
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2019 (9) TMI 1077
TP Adjustment - determination of ALP in respect of international transaction carried out by the assessee with its Associated Enterprise (AE) - HELD THAT:- From the documents given it is difficult to decipher as to what services were rendered by the AE. The document suggests some course of action to be followed in relation to upgradation and migration of ICAP upgrade, IPA upgrade, MMS, COFS, CAS OTP. As can be from the Chart given in the earlier paragraph, description in Sl.No.B2 to B10, is general in nature. From this one cannot say that the services stated therein were in fact rendered by the AE and other aspects regarding the cost to the AE and the benefit the Assessee received. Similar is the description of services claimed to have been provided by the AE in Sl.No.C 1 to C 8 of the chart given in the earlier paragraph. We have already referred to some E mails which are not contemporary in nature and expressed the view that those E mails do not establish the case of the Assessee. Assessee has to show as to how the services referred to in the chart were in fact rendered by the AE. On the evidence on record, we cannot say that the payment by the Assessee for IGS is at Arm s Length or to say that it is not at Arm s Length. The Assessee has to establish and show that it satisfies the parameters as laid down in judicial pronouncements referred in the earlier paragraphs of this order. As already set out the arguments of assessee on the aforesaid services. We find that these documents are general in nature and do not prima facie establish the requirements for testing the payment as at Arm s Length in the light of the parameters laid down in the decisions referred in the earlier paragraph. All the documents are presentations or other brochures, the significance and utility of which, there appears to be no explanation. In the given facts and circumstances, we deem it fit and proper to remand the issue of determination of ALP to the TPO/AO afresh. We are of the view that the Assessee should be directed to let in cogent evidence and explain the evidence already on record or any other evidence to show the rendering of IGS by the AE and other parameters that need to be satisfied to establish the ALP of the price paid for IGS as laid down in judicial pronouncements referred to in the earlier part of the order. Appeal of the assessee is treated as allowed for statistical purpose.
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2019 (9) TMI 1076
Admission of additional evidences under rule 46A by the CIT(A) - HELD THAT:- The law in relation to admission of Additional Evidences, as contained is Rule 46A of I.T. Rules has already been reproduced in foregoing paragraph (C.2) of this order. The circumstances under which Ld. CIT(A) may admit Additional Evidences have been exhaustively listed in clauses (a), (b), (c) and (d) of Rule 46A(1) of I.T. Rules. However, on perusal of the impugned order of CIT(A) we find that she has nowhere commented which of the aforesaid clauses of Rule 46A(1) of I.T. Rules were applicable in the instant case. Moreover, we find that under Rule 46A(3) of I.T. Rules, the CIT(A) is duty bound, once the Ld. CIT(A) admits the Additional Evidences, to allow a reasonable opportunity to the AO, as per clauses (a) and (b) of Rule 46A(3) of I.T. Rules. However, after admitting the Additional Evidences, Ld. CIT(A) failed to provide such opportunity to the AO as has been prescribed under Rule 46A(3) of I.T. Rules. After commissioner of Income Tax (Appeals) admits Additional Evidences produced by assessee, scrutiny of such Additional Evidences admitted by Commissioner of Income Tax (Appeals) is the statutory right of the AO, conferred under Rule 46A(3) of I.T. Rules. Following the aforesaid precedents in the cases of CIT vs. Manish Buildwell [ 2011 (11) TMI 35 - DELHI HIGH COURT] and ITO vs. Pardeepa Rani [ 2016 (8) TMI 1461 - ITAT DELHI] ; we set aside the aforesaid impugned appellate order dated 29.06.2012 of Ld. CIT(A) with the direction to pass fresh order. If the Ld. CIT(A) decides to admit Additional Evidences, he should clearly state the specific clause(s) of Rule 46A(1) of I.T. Rules that would apply; while recording the reasons under Rule 46A(2) of I.T. Rules. Further, if the Ld. CIT(A) decides to admit Additional Evidences, reasonable opportunity prescribed under Rule 46A(3) of I.T. Rules must be provided by the Ld. CIT(A) to the AO.
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2019 (9) TMI 1075
Rejection of books of accounts - NP determination - addition made by AO of net profit at 9% of total turnover - HELD THAT:- From the perusal of the audited financial statements of the assessee, we find that assessee was also in receipt of direct income and maintenance income respectively which were offered to tax as business income by the assessee and assessed as such by the ld. AO. These two figures were included as part of total turnover by the ld. AO while estimating the net profit of 9% thereon, but were sought to be excluded by the ld. CIT(A) as they were not derived from contract business. Assessee had maintained the consolidated financial statements for all his business activities carried out including the contract business and from which division wise transactions, turnover, purchases, expenses and its related profitability could be properly deduced there from. These details were also provided before the ld. AO and before the ld. CIT(A). CIT(A) had resorted to reject the books of accounts of the assessee only in respect of contract business and determined the net profit thereon at 9%. This is a classic case of rejection of books of accounts of the assessee partially by the ld. CIT(A). As already given our detailed observationsdisregarding the primary contentions of the ld. AO to reject the books of accounts we hold that this is not a fit case for rejection of books of accounts and book results u/s.145(3) of the Act and estimating the net profit of the assessee thereon. At the cost of repetition, we find that both the gross profit and net profit ratios had indeed increased during the year in contract business as well as in the overall business activities. Accordingly, we direct the ld. AO to delete the addition made towards estimation of net profit and accept the book results of the assessee in the facts of the instant case. Accordingly, the grounds raised by the assessee are allowed.
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2019 (9) TMI 1074
Penalty u/s 271(1)(c) - STCG in the hands of the assessee u/s 50 - HELD THAT:- It is the claim of the assessee that as neither the block of asset of the gala had ceased to exist during the year under consideration, nor the full value of consideration received or accruing as a result of transfer of the aforesaid gala exceeded the modified actual cost of the assets falling within the said block of assets, therefore, no STCG on the sale of the said gala viz. Sadhana Industrial Estate did arise in the hands of the assessee as per the mandate of Sec.50 of the Act. We find that the aforesaid new line of argument which was for the very first time raised by the assessee while assailing the penalty imposed u/s 271(1)(c) before the CIT(A), was however rejected by the appellate authority for the reason that the said claim of the assessee was not discernible from the facts available on record. CIT(A) had categorically observed that the assessee had failed to file the balance sheet or the schedule of fixed the assets to support its aforesaid claim. CIT(A) declined to summarily accept the aforesaid unsubstantiated claim of the assessee and upheld the penalty imposed by the A.O u/s 271(1)(c) of the Act. We find that even before us the ld. A.R had adopted a similar approach and except for reiterating his aforesaid claim, had however, failed to place on record the requisite material which would irrefutably support the factual position so claimed by him. Admittedly, we are principally in agreement with the claim of the ld. A.R and are persuaded to subscribe to his claim that in the backdrop of the aforesaid facts as had been canvassed by him before us, no STCG would arise in the hands of the assessee under Sec. 50 of the Act. We cannot remain oblivious of the fact that the said claim of the assessee which is bereft of any supporting documentary evidence that would substantiate the veracity of its aforesaid claim, cannot be summarily accepted on the very face of it. We thus, in all fairness, are of the considered view that the matter requires to be revisited by the A.O. In case the aforesaid factual position as had been demonstrated by the assessee before us is found to be in order, then the penalty imposed by the A.O under Sec. 271(1)(c) shall stand vacated. We thus in terms of our aforesaid observations for the aforesaid limited purpose restore the matter to the file of the A.O for fresh adjudication. - Appeal of the assessee is allowed for statistical purposes
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2019 (9) TMI 1073
Bogus purchases u/s 69C - addition of 12.5% of such purchases - AO added the entire amount of purchases in assessee s income - HELD THAT:- CIT(A) had also called a remand report and after considering the remand report, restricted the addition to the extent of 12.5% less the G.P already declared by assessee, after recording a detailed finding which has not been controverted by the ld DR by bringing any positive material on record. CIT(A) upheld additions of 12.5% and also given further credit of G.P. already declared by assessee. The order passed by CIT(A) after considering the remand report is very reasoned order. Accordingly, we do not find any reason to interfere with the order of CIT(A) upholding the addition on account of bogus purchases to the extent of 12.5% less G.P. already declared by the assessee in the last purchase.
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2019 (9) TMI 1072
Penalty u/s 271(1)(c) - non accounting/booking of TDS - HELD THAT:- We are of the view that the non accounting/booking of TDS as income in assessee's books of accounts is due to inadvertent mistake and no penalty u/s 271(1)(c) is attracted in the case of the assessee. Disallowance of interest expense u/s 36(1 )(iii) - we observe that the assessee has given interest free loan to its group concern M/s. Myzus Infotech due to commercial expediency and business exigency. The AO disallowed the proportionate interest expense u/s 36(1 )(iii) of the Act, holding that the interest bearing funds are used for giving interest free advance to group concern. Under the identical facts the Hon'ble Supreme Court of India in the case of S.A. Builders Vs. CIT 2 [ 2006 (12) TMI 82 - SUPREME COURT] has allowed the interest expense as deductible revenue expense wherein the interest free funds are given by the assessee to its sister concern as a measure of commercial expediency. It cannot be said that the assessee has concealed its income or furnished inaccurate particulars of such income. It is only a case wherein the AO did not accept the legitimate claim of the assessee due to difference of opinion on the same set of facts and hence under the facts and circumstance of the case of the assessee at least no penalty can be levied u/s 271(1)(c) of the Act. Disallowance of interest expense by capitalizing it to Capital work in progress - the interest expense was incurred by the assessee on loans taken for its working capital requirement. The AO allocated the interest expense incurred on working capital requirement to Capital Work in Progress only on the basis of assumption and surmises and disallowed interest expense u/s 36(1)(iii) of the Act. The assessee has not made any borrowing for specific asset or incurred any interest expense for Capital Work in Progress. Thus, there was no concealment of income or furnishing of inaccurate particulars of such interest so as to attract penalty u/s.271(1)(c). In this regard, we observe that the Hon'ble Supreme Court of India in its decision in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] has clearly laid down a proposition of law that by no stretch of imagination making an incorrect claim in law, would amount to concealment of income or furnishing of incorrect particulars of income. Thus, levy of penalty was not justified. We hold that it is not a fit case for levy of penalty, accordingly, AO is directed to delete the penalty so imposed u/s.271(1)(c) - Decided in favour of assessee.
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2019 (9) TMI 1071
Penalty u/s 271(1)(c) - issue set aside by the Tribunal in quantum appeal - HELD THAT:- Order of Tribunal in quantum appeal, which was set aside to the AO, directed the AO to withdraw the penalty imposed u/s.271(1)(c) of the Act on the grounds that when the assessment order is set aside to AO, the penalty order has no legs to stand and has to be restored to AO. The order of CIT(A) is very reasoned and as per law as the penalty cannot survive when the issue is set aside by the Tribunal in quantum appeal. Disallowance u/s.14A r.w.Rule 8D(ii) and disallowance u/s.14A r.w.Rule 8D(iii) - HELD THAT:- CIT(A) has rightly relied on the decision in the case of HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] has held that in case the interest free funds available with the assessee are more than the investments in the securities yielding exempt income then the presumption has to be drawn that investments are made out from interest free funds and not out of interest bearing funds. Similarly, on the issue of disallowance under rule 8D(2)(iii), the CIT(A) rightly observed that the disallowance cannot exceed the expenses incurred by the assessee. Hence, we uphold the order of Ld.CIT(A) in this regard. Disallowance u/s.36(1)(iii) - DR submitted that the assessee has failed to submit any documentary evidences and explanation of interest paid on these advances to - admission of additional evidence. - HELD THAT:- The issue raised by the Revenue that the CIT(A) has no power to set aside the matter to the AO for verification and allowing the same is not as per law and the CIT(A) has no such power to aside the issue to the file of AO. Besides the contention of Ld.DR was that the CIT(A) has admitted the additional evidence in the form of analysis of inflow and outflow of funds and interest thereon. The Ld.CIT(A) allowed relief to the tune of ₹ 18,40,03,334/- on the basis of said analysis. So far as the question of admitting the additional evidence is concerned, we do not find any merit in the contentions of the Revenue as the CIT(A) has only considered the analysis of the inflow and outflow of the funds which was also filed by the assessee before the AO. Therefore, on this count, the ground raised by the Revenue does not succeed. We are of the view that the assessee has shown clearly that funds were given out of the commercial expediency and, therefore, we do not see any good reason to deviate from the findings of the CIT(A) in this regard. Accordingly, we dismiss this ground of appeal of Revenue.
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2019 (9) TMI 1070
Disallowance u/s 36(l)(vii) r.w.s. 36(2) - bad debts written off in the P L account - CIT-A deleted the addition treating giving and taking of loans as normal business activity of the Assessee Company - HELD THAT:- Assessee apart from being a builder and developer is also engaged in the business of financing/money lending. CIT(A) has also given a finding to this effect. This is also supported by the fact that the loans were granted by the assessee in earlier years and the income there from has been offered to tax. When these loans are becoming irrecoverable the writing off of the same is eligible for deduction under section 36(2). We note that section 36 (2) posits that, in making any deduction for a bad debt or part thereof the following provisions shall apply. No such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof written of more often earlier previous year, or represents money lent in the ordinary course of business of banking or money lending which is carried on by the assessee. Writing off of sums which represent money lent in the ordinary course of business is allowed as deduction. AO has clearly erred in not considering the later part of the aforesaid section. He is clearly into error in holding that for writing off of money lent in ordinary course of business the allowance/deduction can be allowed only if the sum has been computed as income in the earlier assessment year.- Decided against revenue.
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2019 (9) TMI 1069
Estimation of gross profit - rejection of books of accounts - CIT-A directing the A.O to accept the book results and delete the addition - HELD THAT:- Assessee is a corporate entity and it accounts were subjected to Audit under The Companies Act as well as under The Income Tax Act. No qualification / adverse remarks have been made by the auditors regarding maintenance of stock records / valuation etc. The figures of sale as well as purchases, on aggregate basis, as per books of accounts perfectly matched with assessee s financial statements. The assessee had produced all sales as well as purchase invoices in digital form before AO during assessment proceedings. No discrepancies could be pointed out in the same by AO. Further, no specific defects were pointed out in the books of accounts as well. The whole allegation of AO emanates from figures reported by the assessee in Schedule 19 of the Balance Sheet, based upon which certain conclusions were drawn. Quantitative discrepancies, if any, stood explained by the fact that the assessee s nature of business made it impractical to report the quantitiative details in the desired manner. The perusal of sample invoices, as produced before us, would support the fact that the assessee was procuring raw material from several vendors which would be assembled into a composite product which could be sold with or without software and the sale transaction could be with or without service contracts. Those facts would explain non-reporting of quantitative details in Schedule 19 of the Balance Sheet and therefore, the conclusions drawn by Ld. AO from the same would obviously distort the factual matrix. Gross Profit rate in earlier years were much lower after excluding the service income. So far as the reconciliation of Service income TDS figures reported in Form 26AS is concerned, no specific allegation of non-reporting of any income has been made by Ld. AO in the quantum assessment order and therefore, no adverse conclusion could be drawn therefrom. FAA has clinched the issue in the right perspective and therefore, the same would not require any interference on our part. No convincing case has been made before us to remit the matter back to the file of Ld. AO. Therefore, by confirming the stand of Ld. CIT(A), we dismiss the appeal of revenue
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2019 (9) TMI 1068
Validity of order passed u/s 201(1) 201(1A) - period of limitation - TDS u/s 195 - assessee had made a remittances to certain foreign parties without deduction of any tax at source - disallowance under Sec. 40(a)(ia) - HELD THAT:- We are persuaded to subscribe to the claim of A.R that the order under Sec. 201(1) 201(1A) r.w.s 195 for A.Y 2007-08 in the case of the assessee before us could have been passed latest by 31.03.2011. Accordingly, as the order under Sec. 201(1) 201(1A) r.w.s 195 had been passed by the ITO (IT)-TDS2, Mumbai on 31.10.2013, therefore, the same being beyond the prescribed time period envisaged in the proviso to Sec. 201(3) is thus barred by limitation. On the basis of our aforesaid observations, we are of the considered view that the order passed by the A.O under Sec. 201(1) 201(1A) r.w.s195, dated 31.10.2013having been passed beyond the prescribed period of limitation cannot be sustained and is liable to be vacated. Order passed the ITO(IT) Mumbai under Sec. 201(1) 201(1A) - a perusal of the letters/notices that the ITO(IT)-TDS, Range-2, Mumbai had only called upon the assessee to furnish certain documentary evidence along with its explanation as to why tax on the payments therein stated was not deducted at source. Neither of the aforesaid letters dated 28.09.2007, 15.02.2008 and 05.09.2013 can be construed as a Show cause notice under Sec. 201(1). In fact, as is discernible from the order passed by the A.O under Sec. 201(1) 201(1A) r.w.s 195, dated 31.10.2013, the Show cause notice was issued by the ITO(IT)-TDS, Range-2, Mumbai to the assessee for the first time on 18.10.2013,wherein it was called upon to explain as to why it may not be deemed to be an assessee in default and therein be directed to pay the defaulted tax along with interest as per the provisions of Sec.201(1) 201(1A). A perusal order of the ITO(IT)-TDS, Range-2, Mumbai reveals that till 05.09.2013 neither any order under Sec. 201(1) 201(1A) had been passed nor any proceedings were pending with him under Chapter XVII of the I.T. Act in the case of the assessee for A.Y. 2007-08. Proceedings under Sec. 201(1) were initiated by the ITO(IT)-TDS, Range-2, Mumbai for the first time on 18.10.2013, therefore, the contention advanced by the ld. A.R that the said order having been passed beyond a time period of one year from the end of the financial year in which the said proceedings had been initiated, was thus not sustainable. Department has not taken any action against the payee viz. Entec U.K. Ltd., and also the time for taking any such action had expired - As in the case before us the revenue had not taken any action against the payee viz. Entec U.K Limited for nondeduction of tax at source, and also the time limit for taking such action against them under Sec. 148 had expired, therefore, the order against the payer assessee under Sec. 201(1) 201(1A) r.w.s. 195, dated 31.10.2013 would be invalid. Accordingly, the order passed the ITO(IT)-TDS, Range-2, Mumbai under Sec. 201(1) 201(1A) r.w.s. 195, dated 31.10.2013 is also struck down on the said count. - Decided in favour of assessee
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2019 (9) TMI 1067
Assessment u/s 153A - addition of bogus purchases - HELD THAT:- From the record we found that during these assessment years, the assessee had also paid sales tax alongwith interest thereon. Thus, there is no saving on account of sales tax liability which was alleged to be evaded by having entered into such alleged bogus purchases. Considering quantitative details of goods purchased and sold and had also furnished quantitative reconciliation of goods so purchased and sold, the correctness of which was not doubted by the lower authorities respectfully following the order of the Tribunal in assessee s own case, wherein the facts and circumstances are same, we direct the AO to restrict addition to the extent of 2% of bogus purchases. From the record, we also found that in the A.Y.2008-09, assessee had shown profit of 0.62% on the normal purchases i.e. purchases other than alleged bogus purchases, whereas margin earned in respect of alleged bogus purchases was 0.61%. Thus, we found that there is only difference of 0.01% in the margin shown by the assessee in respect of alleged bogus purchases vis- -vis purchases other than alleged bogus purchases. Similarly, in the A.Y.2010-11 margin earned in respect of normal purchases i.e. purchases other than from alleged bogus purchases is 2.65%, whereas margin in respect of alleged bogus purchases is 1.89%. Thus, the difference in margin is just 0.76%. Thus, we found that upholding the addition to the extent of 2% of bogus purchases will serve the end of justice, which is in consonance with the order passed by the Tribunal in assessee s own case and group concern, as stated above. Since the Tribunal have already upheld the addition to the extent of 2% in respect of purchases made from M/s. Sai International Impex, which purchases was again added by the AO while completing assessment u/s.143(3) r.w.s. 153A, which amounts to double addition. Accordingly, AO is directed to take care of addition already upheld by the Tribunal in respect of purchases from M/s. Sai International Impex
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2019 (9) TMI 1066
Bogus LTCG - Penny stock transaction - denying exemption u/s. 10(38) - HELD THAT:- It is the claim of the assessee that he has earned the gain in this case where the share price off a little-known company has jumped 3800% in no time and that all documentary records are available. But there is no economic or financial justification for such astonishing jump. In identical situation wherein the enormous jump in share price in very little time without any economic or financial justification was confirmed by the ITA, the same was duly confirmed by the honourable jurisdictional High Court in the case of Sanjay B. Jain [2017 (5) TMI 983 - BOMBAY HIGH COURT] This is a classic case of penny stock transaction. Such conversion of unaccounted money through dubious method is not permitted on the touchstone of Hon'ble Supreme Court decision in the case of CIT Vs. Durga Prasad More [1971 (8) TMI 17 - Supreme Court] - Decided against assessee.
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2019 (9) TMI 1065
TP adjustments - advertising, marketing and promotion expenses (AMP Expenses) - HELD THAT:- Transfer Pricing Officer (TPO) held that by incurring such expenses, the assessee has provided services to its Associate Enterprises (AE). Though a number of arguments were advanced by both the parties on this issue, the primary argument of the assessee is that, the transaction in question is not an international transaction. AMP Expenses cannot be regarded as an international transaction as per Section 92B of the Act, in the case of the assessee so as to invoke provisions of Section 92 of the Act. As we have held that the that the AMP expenditure in question is not an international transaction, the TP adjustment made in this regard is hereby deleted and these grounds of the assessee are allowed. TP adjustment with respect to research and training expenditure ( R T Expenditure ) - HELD THAT:- Assessee has not carried out any R T activities. The expenditure in question is incurred only for its manufacturing operations and local environmental compliance from HSE perspective. The assessee submitted that ICT also does not carry out any research and development activities for development of any new project/technology. It is primarily a captive support centre for the local India operation of the assessee. Thus, we are of the considered opinion that the expenditure on research and training does not constitute any international transactions on facts. We also find that the TPO/AO has not considered this expenditure incurred in the earlier years towards R T expenses, as international transactions. Thus, in view of the above discussion, we hold that the expenditure incurred on R T is not an international transaction as per Section 92B of the Act, so as to enable invocation of provision of Section 92 TP Adjustment made with regard to the International Transaction pertaining to Intra Group Services - HELD THAT:- As Consistent with the view taken therein, as agreed by both the parties, we restore this issue to the file of the Assessing Officer, for fresh adjudication, in accordance with law. Accordingly, this ground of the assessee is allowed for statistical purposes. Provisions made for meeting liabilities is an ascertained liability - HELD THAT:- DRP on the ground that the provision was made based on data of past activities and on the ground that the provision was made in a systematic and scientific manner directed the Assessing Officer to allow the same by applying the propositions of law laid down by the Hon ble Supreme Court in the case of Rotork Controls India (P.) Ltd. v. Commissioner of Income-tax, Chennai [ 2009 (5) TMI 16 - SUPREME COURT] Disallowance by the DRP, of normal depreciation and additional depreciation opertaining to Colour Soluble Machine - HELD THAT:- Colour solution machines, have rightly been classified as plant and machinery by the DRP. It correctly held that these are operational tools and cannot be called furniture and that the test must be as to whether these machines are owned by the assessee and have been used for the purpose of business of the assessee. These tests were satisfied for claim of depreciation as plant and machinery We find not infirmity in this order of the ld. DRP. Thus, we uphold the same and dismiss this ground of the revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The assessee suo moto disallowed ₹ 7,61,500/- u/s 14A r.w.r. 8D, in its computation of income under the normal provision of the Act. The Assessing Officer enhanced the disallowance by ₹ 5,34,41,354/-. The DRP directed the Assessing Officer to follow the judgment of the Hon ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and recompute the disallowance. Disallowance u/s 14A r.w.r. 8D while computing the book profits u/s 115JB - HELD THAT:- Directions of the DRP are that the Assessing Officer has to strictly construe Section 115JB of the Act and not to make a similar disallowance therein. See VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI]
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2019 (9) TMI 1064
Penalty u/s. 271(1)(c) - addition made on account of unexplained cash credits - HELD THAT:- From the perusal of the assessment order as well as penalty order passed u/s.271(1)(c) of the Act, it is clear that the addition was made by the AO on the mere inability to substantiate cash credits received. There is no finding by the AO that any particulars filed by the assessee are found to be false. The Hon ble Supreme Court in the case of Reliance Petro Products (P) Ltd [ 2010 (3) TMI 19 - SUPREME COURT] held that mere disallowance of the claim does not amount to furnishing of inaccurate particulars of income and therefore levy of penalty is not warranted. Hence, we do not find any fallacy in the reasoning of the Ld.CIT(A) while dealing with the penalty in respect of addition of unexplained cash credit. Accordingly, we do not find any merit in the appeal filed by the Revenue.
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2019 (9) TMI 1063
Set off of unabsorbed depreciation against Income from House Property and Income from Other Sources - HELD THAT:- Admittedly, as per the provisions of Sec. 32(2) of the Act prior to their amendment by the Finance Act, 2000 w.e.f 01.04.2001 the set off of the unabsorbed depreciation was restricted to the profits and gains from business or profession. Post-amendment of Sec. 32(2) the set off of unabsorbed depreciation is no more restricted to the profits and gains of business or profession. In fact, pursuant to the amendment made available on the statute vide the Finance Act, 2001, w.e.f 01.04.2002 the liberal regime prior to A.Y 1997-98 had been restored from A.Y 2002-03 onwards. The observations of the A.O as regards the limited scope of set off of unabsorbed depreciation appears to be guided by the pre-amended provisions of Sec. 32(2) of the Act i.e as had remained available on the statute during the period A.Y 1997-98 to A.Y 2000-01. Our aforesaid view that existence of any business in the year in which the unabsorbed depreciation is sought to be set off by the assessee is not required is fortified by the judgment of the Hon ble Supreme Court in the case of CIT Vs. Virmani Industries Pvt. Ltd. [ 1995 (10) TMI 1 - SUPREME COURT ] As is discernible from a perusal of the aforesaid statutory provision i.e Sec. 32(2), it can safely be concluded that as the same in substance had remained the same as in context to that applicable to the case of the assessee before us, therefore, the aforesaid view arrived at by the Hon ble Apex Court seizes the issue under consideration. We are of the considered view that as the set off of the unabsorbed depreciation cannot be bridled with a condition that the business should be continued by the assessee in the said year, therefore, the claim of set off of the brought forward unabsorbed depreciation by the assessee against its current year Income from house property and Income from other sources is found to be in conformity with the mandate of law. - Decided against revenue.
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2019 (9) TMI 1062
Waiver of loan - Addition u/s 41 or 28 - HELD THAT:- Funds from the cash credit facility were diverted to purchase capital asset. We note the chart given by the assessee shows utilization of fund for acquisition of capital assets vis-a-vis source of fund for the last 6 years prepared on the basis of the Audited Annual Accounts. It is evident from the chart that the cash credit and term loan was utilized for the purpose of acquiring capital assets. Even if the borrowing was in the nature of cash credit, it was not utilized for working capital. Therefore it is clear from the chart that no part of it is falling within the domain of current asset. Thus, it cannot be said that the loan was not utilized for the purpose of capital asset. We note that these receipts i.e. cash credit facility and term loan were utilized for capital assets and these receipts being capital receipts are not taxable, for that we rely on the judgment of the Hon'ble Supreme Court of India in the case of Commissioner vs. Mahindra Mahindra Ltd. [ 2018 (5) TMI 358 - SUPREME COURT] Depreciation for the fixed assets acquired in view of observation that assets was not acquired before 31.03.2010 - HELD THAT:- As assessee submitted copies of the invoices towards purchase of fixed assets and contended that the machineries were received well before 31/03/2010. It is further submitted that the machineries were duly installed within 31/03/2010 as the same was in knock down condition. TheldCounsel further submitted that the A.O. misunderstood the facts that RC date mentioned on the face of the invoice as date of receipt. In fact the RC date is the date of receipt of invoice at Head office. It is evident from the details of addition to fixed assets that the concern machineries were received within 31st March, 2010. After considering and going through the submission along with supporting documents furnished, we are inclined to agree with the order of ld CIT(A). That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed. Addition towards interest subsidy received - HELD THAT:- As submitted that the annual accounts of the company are prepared as per accounting standards and accounting policies as prescribed by the Companies Act. The company follows mercantile system of accounting. A.O. without going to the facts of the case added interest subsidy received during the year to the total income of the assessee. It is clear from the note no. 5 of the schedule 17 (Note on Accounts) of the Annual Accounts for the previous year 2009-10, that the assessee company had shown ₹ 345.36 lacs as recoverable on the basis of claim lodged with appropriate authorities in the earlier year and ₹ 293.69 lacs had been shown as recoverable for the previous year ended 31st march, 2010 after adjusting ₹ 51.67 lacs received during the year. As such the subsidy received during the year has already taxed in earlier years. Hence the same cannot be taxed twice.We note that ld CIT(A) has rightly deleted the addition on this account.
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2019 (9) TMI 1061
Addition of unexplained cash deposits u/s 68 - onus to prove - HELD THAT:- Onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessed nor should the AO take such repudiation at face value and construe it, without more, against the assessed. AO is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. Appellant has not been able to discharge even the basic onus to prove the genuineness of cash credits in his bank accounts. Therefore, in my considered view when the existence of the source of such cash deposits is not proven then the AO is fully justified in treating such cash deposits as unexplained and liable to be taxed. We find that the finding of the AO as well as the ld. CIT(A) is based on the specific facts detected during the enquiry conducted by the AO whereas the assessee has failed to produce any evidence which can be independently verified in support of his claim - Decided against assessee.
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2019 (9) TMI 1060
Bogus LTCG - unexplained cash credits u/s 68 - HELD THAT:- There is no dispute above assessees having derived the impugned LTCG on transfer of shares held in Sulabh Engineering and Services Ltd. Learned Departmental Representative fails to dispute that very issue stands adjudicated in assessee s favour in SANJEEV GOEL (HUF) VERSUS INCOME TAX OFFICER, WARD-45 (3) , KOLKATA [ 2018 (8) TMI 1747 - ITAT KOLKATA]. Transactions in scrips supported by the corresponding relevant evidence to be genuine. We adopt the above extracted learned co-ordinate benches detailed reasoning taking into consideration of various decisions of hon'ble jurisdictional high court (supra) to conclude the lower authorities have erred in law and on facts in treating assessee s LTCG in issue as unexplained cash credits. The impugned addition is deleted therefore. commission disallowance / addition also follows suit.
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2019 (9) TMI 1059
TP Adjustment - comparability of companies - HELD THAT:- Companies functionally dissimilar with that of assessee and extraordinary events that occurred during the relevant previous year which had impact on the profit margin of this company and not satisfying employee cost filter need to be deselected from final list. Not treating provision for doubtful debts, provision for warranty - HELD THAT:- Under the scheme of income tax act mentioned in chapter 10 a LP is required to be determined of the tested party by comparing price percentage charged by the assessee whiz comparable in respect of international transactions entered by the assessee with its AE. If the bad debts, provisions of warranty, doubtful interest, miscellaneous expenditures are taken for earlier years then formula for calculating the profit percentage would be disturbed, as only current year s turnover with the corresponding operating revenue are operating expenses are required to be considered. By allowing this to be considered for the purpose of determining ALP, distorted results will arise, there will be change in numerator without corresponding changes in the denominator i.e., bad debts etc., would be taken into account without taking into account the turnover of the earlier years. Further our view is also supported by the fact that ALP is to be determined with reference to the international transaction entered for the year under consideration. However the details of the various heads namely bad debts doubtful debts etc., are not available which are restricted to the year under consideration, as consolidated figures are available on record - ground remanded back to the file of the TPO/AO for granting bad debts, doubtful debts et cetera as permissible expenses, if the same appertaining to be under consideration
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2019 (9) TMI 1057
Correct head of income - income earned from letting out various shops/stalls in shopping malls - income from profits and gains from business and profession or income from house property - HELD THAT:- Where the assessee company developed shopping malls and business centers on properties owned by it and let out same by providing host of facilities in said business centre, income derived there from was business income, as held in the case of A.C.I.T. - VS- STELLER DEVELOPER (P.) LTD. 2015 (8) TMI 460 - ITAT MUMBAI ] Again, where the assessee's main objects were acquiring, constructing, operating and maintaining of multiplexes, business centres, etc., income derived from such activities is to be treated as business income and not income from house property as held by the Coordinate Bench of ITAT Mumbai in the case of SHREEJI EXHIBITORS -VS- A.C.I.T. [ 2015 (8) TMI 886 - ITAT MUMBAI ] . Therefore, it is settled law that the income earned by the assessee from letting out various shops/stalls in shopping malls constructed by them is to be treated as business income and not as income from house property. Addition u/s 68 - whether creditor was having creditworthiness to substantiate her investment in share capital/premium worth - HELD THAT:- AO accepted the claim of the assessee in A.Y. 2011-12, in respect of share capital/premium of ₹ 90,00,000/-, therefore balance claim of ₹ 1,50,00,000/- in the assessment year under consideration is also genuine, as there is no change in the facts and in the nature of amount. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. Therefore, we note that there is no infirmity in the order passed by the ld CIT(A). We note that the identity of the Share Capital Subscriber, Mrs. Davina Mary Lyngwa is not in dispute, since she had identified herself before held AO in compliance to summons under Section 131 of the Act, issued to her. The fact that the notice under Section 133(6) of the Act calling for information from her as well as summon issued under Section 131 were well served upon her at her residential address at D/o Late Sh. F.G. Franklin, Mission Compound Road, Mawkhar, Shillong-02. Even the Ld. AO had not disputed the identify of Mrs. Davina Mary Lyngwa. Further, Mrs. Davina Mary Lyngwa had duly confirmed the investment made by her during the above assessment year in the shares of the Assessee Company. Details of investments, including the investments made during the above assessment year, that the said share capital subscriber, Smt. Davina Mary Lyngwa, is a person of considerable means. The fact that she had got 7 properties at various places in Meghalaya apart from Guest Houses etc. has not been disproved by the Ld AO. Apart from this, Mrs. Davina Mary Lyngwa had also confirmed her sources of income, during the course of deposition. Addition on account of parking fees - as during the assessment proceedings the AO treated 20% of parking fees on account of personal expenses and added to the total income of the assessee - HELD THAT:- We note that assessment of the assessee was carried out by the AO under section 143 (3) of the Act, and not under section 144 of the Act, therefore, without rejecting the books of account of the assessee, the adhoc disallowance to the tune is not permitted. Therefore, we do not find any infirmity in the order passed by the learned CIT(A), his order on this issue is hereby accepted and the grounds of Revenue are dismissed.
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2019 (9) TMI 1055
Addition on account of low GP shown by the assessee - Sales could be estimated if the books of accounts of the assessee are rejected - HELD THAT:- The assessee has pointed out that accounts of the assessee-company is subject to statutory as well as tax audit, and its books are duly audited and the AO has not rejected the books of accounts. AO has nowhere expressed his inability to deduce true income from the accounts. The assessee has also pleaded that it is a sick company, facing acute shortage of funds and its loan account with consortium of bankers also became NPA; banks have filed recovery suit and they have also assigned the debt of the company in favour of the Asset Reconstruction Company i.e. Asrec India Ltd. AO has only compared certain figures of raw-material vis- -vis output without comprehending other aspects for consumption of other material as well as achievement of sales. Some of the item may be lying in the closing stock or in semi-finished products. All sorts of such aspects have not been considered by the ld.AO while estimating unaccounted sales. On the other hand, the ld.CIT(A) has appreciated the facts in right perspective and no addition is called for on this issue - Decided in favour of assessee. Addition of power and fuel expenses - assessee was not following proper method of accounting and claiming the expenses as per its benefits - HELD THAT:- AO has not given any reasons for making such a huge disallowance without going into the reasons. Neither any bogus claims have been proved nor it was proved why those store items were to be transferred to CWIP R D expenses and those were not the revenue expenditures. Merely some items in the preceding year were debited to the CWIP - R D expenses do not indicate that the same nature of expenditures have been incurred in the year under consideration also. ' Since there was no question on the genuineness of the expenditures and hence there allowability cannot be doubted. When the appellant himself bonafidely transferred some stores and spares expenses to CWIP R D in the preceding year than in the year under consideration with the same bonafides he has not transferred the same because those were not required to do so. It was the onus on the appellant to disprove the appellant's stand which he has not discharged. Further neither the AO has proved that the expenditures were not made for the purpose of business. In view of the aforesaid discussion, the disallowance made by the A.O. is found not justified and hence same is deleted - Decided in favour of assessee.
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2019 (9) TMI 1054
Non service of notice u/s 143(2) - notice issued at a wrong address - HELD THAT:- It is seen that notice u/s 143(2) of the Act was issued to the address at 85, Kumharon Wali Gali, Village Khampur, Delhi which was not served on the assessee whereas the correct address is C-83, Village Khampur, Delhi . As per the assessment records, i.e. return of income filed by the assessee as well as assessment order, address of the assessee is C- 83, Village Khampur, Delhi . Subsequent notices dated 28.01.2011, 19.07.2011, 01.12.2011 as well as Questionnaire dated 19.07.2011 have been issued at the address C-83, Village Khampur, Delhi . Thus, it is an undisputed fact that notice u/s 143(2) of the Act was issued at the wrong address and, therefore, it can be safely concluded that the same could not have been served upon the assessee at all. The Hon'ble Delhi High Court has on numeric occasions held that notice issued at a wrong address cannot be said to be a valid service of notice. In the case before us, the address which has been mentioned in the notice u/s 143(2) is none of the addresses as provided in Rule 27(2) and, therefore, it can be safely concluded that service was not proper in terms of Rule 127 of the I.T. Rules. - Decided in favour of assessee.
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2019 (9) TMI 1053
Application for registration u/s 12A rejected - HELD THAT:- Admittedly before declining the registration u/s 12 of the Act, no reasonable opportunity was provided to the Applicant, which is mandatory, hence on this ground as well, the order under challenge is liable to be set aside. To meet the substantial justice, in our considered view, appropriate course would be to set aside the order impugned and remand back the case to the file of the CIT(E) for decision afresh. The Applicant society shall be under obligation to demonstrate the relevant details/documents to the satisfaction of the LD. CIT(E) qua land and building being used for running the school by the society and also to submit the affiliation with the CBSE, Delhi, failing which the CIT(Exemptions) shall be at liberty to draw the adverse interference if any. CIT(E) shall be at liberty to consider all issues already raised or to be raised further and otherwise feel, fit and appropriate for consideration for proper adjudication of application for registration u/s 12AA of the Act. Appeal filed by the assessee allowed for statistical purposes.
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Customs
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2019 (9) TMI 1115
Refund of Excess Customs Duty - time limitation - main contention of the petitioner, as advanced in the writ petition, is that, in the absence of an appealable order, the petitioner was unable to appeal against the assessment of the Bs/E filed by it and that, therefore, the observation, of the part of the AC, in the impugned letter dated 8th September, 2019, that the petitioner ought to have appealed against the assessment of the Bs/E filed by it, was without merit - HELD THAT:- We are not called upon to express any opinion on any appeal which the petitioner may, if so advised, choose to prefer, against the assessment of the three Bs/E filed by it, either on the aspect of limitation, or on merits. Any such appeal, preferred, would, needless to say, have to be decided, by the competent appellate authority, in accordance with law. Learned counsel appearing for the petitioner submits, candidly, that he would be satisfied if this writ petition is disposed of by permitting the petitioner to prefer an appeal against the assessment of the Bill of Entry with the direction to the respondents to decide the same in accordance with law. It is directed that, as and when appeal is preferred by this petitioner against the assessment of the Bills of Entry filed by it, the same will be decided by the respondents in accordance with law - petition disposed off.
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2019 (9) TMI 1114
Maintainability of Reference application - substantial question of law involved or not - HELD THAT:- On perusal of the questions, it appears to us that they are routine legal issues which arise out of orders passed by the tribunal. No substantial question of law is involved. The tribunal has taken a possible view. More than 25 years have elapsed after the order of the tribunal. In those circumstances, we are not willing to take notice of those routine ordinary questions of law raised in the terms of reference, answer them, set aside the order of the tribunal and direct the tribunal to decide the appeal afresh in accordance with our answers. That exercise is not warranted - reference application dismissed.
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2019 (9) TMI 1113
Imposition of Penalty u/s 112(a)/114AA of CA - import of goods and sale on High seas sale - mis-declaration of value - short payment of duty - Section 108 of CA - HELD THAT:- Once the person who has filed the Bill of Entry has admitted and paid the differential duty on account of misdecalaration of value, the value as determined in the show cause notice and by the settlement commission will become the value under section 14 of the Customs Act, 1962. We do not find any merits in the submissions of the Appellant that the Commissioner should have again considered and re-determined the value, as per the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. Once the value has been found misdeclared the goods become liable for confiscation under Section 111(m) of the Customs Act, 1962 and the person misdeclaring or abetting in such misdeclaration is liable to penalty under section 112(a). Appellants Shri Kaushal A Shah and Shri Jiten Shah are responsible for issuance of the invoice misdeclaring the value. This invoice was the document which was the basis for filling the B/E misdeclaring the value of imported goods. Once it is established that Shri Kaushal A Shah and Shri Jiten Shah were responsible for filing or causing to file the documents misdeclaring the value of goods, section 114AA gets attracted. It is not even the case in the adjudication order that the penalties for the same offence and under the same provision has been imposed upon the proprietor and proprietorship concerns. The adjudication order itself refrains from imposing penalty under Section 112(a), on the proprietors as penalties under the said section have been imposed on proprietorship firms. Appeal dismissed.
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2019 (9) TMI 1112
Classification of imported goods - 48F Optical Fibre Cable - whether classified under CTH 85447090 or under CTH 90011000 - benefit under N/N. 24/2006-Cus dated 01.03.2005 - HELD THAT:- The issue of classification of Optical Fiber Cables has been settled by the larger bench of Tribunal in case of Vodafone Essar Gujarat [ 2018 (1) TMI 959 - CESTAT MUMBAI (LB) ] under Chapter 90. Applicability of Section 28(2B) of CA - appropriation of the amount said to be deposited voluntarily by the respondents - HELD THAT:- In the proceedings initiated by the revenue, demanding the duty by invoking extended period as per the proviso to Section 28(1) of the Customs Act, 1962 revenue cannot seek the benefit of sub section (2B) for the reason it fails to establish its case under the said proviso. Once the show cause notice has been issued in respect of any amount whether deposited or not deposited, by invoking extended period as per the proviso to Section 28(1), the adjudicating authority is bound to determine the issue as per the notice issued. Thus by issuing the show cause notice, Revenue has itself opted not to settle the issue in terms of sub-section 2B of Section 28 of Customs Act, 1962. Having done so they cannot go back subsequently on failing in adjudication proceedings to ask for settlement and appropriation of the amounts paid in terms of this section. Appeal dismissed - decided against Revenue.
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2019 (9) TMI 1111
Irregular imports - Rejection of declared value - confiscation - penalty - HELD THAT:- The importer and the CHA representative were unable to produce the BIS Certificate in respect of the said goods. Instead of producing the certificate appellants tried to manipulate the certificate and produced some other certificate, to cover up the imports. All the irregularities in the imports were accepted by Shri Abhishek Jain, Proprietor of M/s United Traders (Appellant). Appellants have neither in the appeal or during the course of argument contested in respect of the irregularities noticed in the imports made. They have specifically stated that they were not personally responsible for irregularities. These irregularities were caused and committed by one Shri Jitender Aggarwal. They were simply the innocent victims of the misdeeds of Shri Jitender Aggarwal and have suffered huge losses on that account. Once the fact that the goods were imported contrary to provisions of Customs Act, 1962, they become liable for confiscation under the provisions of Section 111 of the Customs Act, 1962 and the person importing such goods is liable to penalty under Section 112 of the Custom Act, 1962 - The decisions relied upon by the appellants do not advance their case. In the present case the goods were seized and then provisionally released. After provisional release of the goods they have been re-exported. In such as situation the goods are liable for confiscation. Appellants have in their appeal and submissions contended that they have made certain deposits during the course of investigation of the case through Shri Jitender Aggarwal. They have claimed that department should be directed to refund the amount deposited by them. We are not in position to pass any order on this request by the appellants, as the issue sought to be raised by the appellant is not the issue decided by the impugned order - Secondly it is for the appellants to establish their claim to the money deposited and subsequent refunds if any due before the Custom authorities and seek refund from them. Appeal dismissed.
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2019 (9) TMI 1093
Maintainability of appeal - alternative remedy - Release of detained goods - provisional assessment u/s 18 of CA - Rejection of declared value - enhancement of value - HELD THAT:- It is not disputed that the petitioner has already filed the Statutory Appeal under Section 128 of CA assailing the Final Assessment Order dated 27.08.2019 before the Commissioner of Customs (Appeals). It is also not in dispute that the petitioner has deposited an amount equal to 7.5% of the demanded differential duty at the time of filing of the appeal. In view of the statutory alternative remedy available to the petitioner having been availed, the only surviving dispute in writ petition pertains to the release of goods lying detained in the Custom Bonded Warehouse under the custody of the Customs Department. Petition disposed off.
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2019 (9) TMI 1087
Interim order - import of dialyzer used in hospitals for carrying out dialysis - HELD THAT:- We admit the appeal and direct expeditious hearing thereof. Since the respondent is represented by learned Counsel, service and issuance of notice of the appeal are dispensed with. Learned advocate-on-record for the appellant is directed to file an informal paper book by 8th November, 2019, serving a copy thereof upon the advocate-on-record for the respondent not later than seven days before the date of hearing of the appeal. All other formalities are dispensed with. List this appeal on 20th November, 2019.
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Insolvency & Bankruptcy
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2019 (9) TMI 1121
Winding up petition - unable to recover debts - Period of limitation - 3 years or 12 years - Section 238A of IBC - whether the Winding up Petition, on the date that it was filed, is barred by lapse of time? HELD THAT:- A suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding up proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act - For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding up proceeding. In the Winding up Petition itself, what is referred to is the fall in the assets of La-Fin to being worth approximately INR 200 crores as of October, 2016, which again does not correlate with 3rd November, 2015, being the date on which the statutory notice was itself issued. This again is only for the purpose of appointing an Officer of the Court as Official Liquidator in order to manage the day-to-day affairs and otherwise secure and safeguard the assets of the Respondent company. There is no averment in the petition that thanks to these or other facts the Company s substratum has disappeared, or that the Company is otherwise commercially insolvent. It is clear therefore that even on facts, the company s substratum disappearing or the commercial insolvency of the company has not been pleaded. Winding up Petition filed beyond the period of three-years mentioned in Article 137 of the Limitation Act is time-barred, and cannot therefore be proceeded with any further.
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2019 (9) TMI 1110
Admissibility of application - initiation of CIRP - Corporate debtor - Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- Recovery is an individual effort by a creditor to recover its dues through a process that has debtor and creditor on opposite sides. When creditors recover their dues one after another or simultaneously from the available assets of the firm, nothing may be left in due course. Thus, while recovery bleeds the corporate debtor to death, resolution endeavours to keep the corporate debtor alive. In fact, the I B Code prohibits and discourages recovery in several ways. Petition dismissed.
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2019 (9) TMI 1109
Maintainability of application - Initiation of CIRP - debt payable by Corporate Debtor - existing of debt or not - application dismissed on the ground that the Circular issued by the Reserve Bank of India dated 12 th February, 2018 to file Corporate Insolvency Resolution Process has been declared to be ultra vires and illegal by Hon ble Supreme Court in DHARANI SUGARS AND CHEMICALS LTD. VERSUS UNION OF INDIA ORS. [ 2019 (4) TMI 230 - SUPREME COURT] . HELD THAT:- There being debt payable by the Corporate Debtor and having committed default, the Appellant has made out a case for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor . Petition under Section 7 of the I B Code is to be considered by the Adjudicating Authority on its own merits taking into consideration the records and in absence of any evidence to show that the State Bank of India filed the application only because of the Circular issued by Reserve Bank of India, it was not open to the Adjudicating Authority to reject the application. Case remitted back to the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata with direction to admit the application under Section 7 after notice to the Corporate Debtor , so as to enable the Corporate Debtor to settle the matter, if it so choses before admission - appeal allowed.
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2019 (9) TMI 1098
Failure of Resolution plan - non-fulfillment of the commitment by Liberty House - completion of resolution plan within 90 days - Section 12 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- We permit the Resolution Professional to invite fresh offers within a period of 21 days. Let steps be taken by the Resolution Professional by tomorrow i.e. by 25.09.2019 for invitation of the fresh offers in accordance with the rules. Within 2 weeks thereafter, the Committee of Creditors shall take a final call in the matter and the decision of the Committee of Creditors and the offers received be placed before this Court on the next date of hearing for consideration. List the matter on 05.11.2019.
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2019 (9) TMI 1058
Liquidation of a Corporate person - company in liquidation - Regulation 14 of the Insolvency Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- In view of the necessary compliances made by the company in liquidation and the Liquidator, this Authority in exercise of the powers conferred under Sub-section (8) of Section 59 of I B Code, 2016 do hereby order the dissolution of the Corporate Person viz., M/s. Sun Asset Reconstruction India Private Limited, from the date of this Order i.e. 15.07.2019. The Corporate Person stands dissolved and the Liquidator stands relieved, who is directed to preserve a physical or an electronic copy of the reports, registers and books of account as referred to in Regulations 8 and 10 of IBBI (Voluntary Liquidation Process), Regulations, 2017, for at least eight (8) year after the dissolution of the Corporate Person, either with himself or with an information utility. Application disposed off.
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2019 (9) TMI 1056
Maintainability of petition - initiation of CIRP - Corporate Debtor has committed a default for an outstanding amount - existence of debt or not - Section 9 of the IBC, 2016, R/w Rule 6 of the I B (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- It is settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount - The Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. The instant case is not a fit case to admit and it is liable to be dismissed - application dismissed.
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2019 (9) TMI 1052
Maintainability of application - initiation of CIRP - liquidation of the Corporate Debtor - HELD THAT:- The Resolution Professional has filed the present application seeking order for liquidation of the Corporate Debtor viz., M/s.RLS Alloys Private Limited. Since, no Resolution Plan has been received by this Authority under Sub-section (6) of Section 30 of the I B Code, 2016, before the expiry of the maximum period of 180 days of CIR Process, the Corporate Debtor has to be ordered for Liquidation. Application allowed.
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PMLA
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2019 (9) TMI 1108
Money Laundering - proceeds of crime - attachment of property - Rule 5 of the Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - HELD THAT:- In the present case, admittedly certain small portion of the immovable property was able portion where the appellant was operating office/Gym in the premises. However, the Respondent has taken the possession even before issuance of notice dated 23.02.2018 under subsection (4) of Section 8 of the Prevention of Money Laundering Act, 2002 (Act No. 15 of 2003) r/w Rule 5(1) of the Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 as mentioned in the notice itself The said notice was served only 27.02.2018 after taking the possession. The possession has been taken by the Respondent contrary to the Rule 5 of the Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - The Respondent was not entitled to take the possession unless 10 days clear notice is issued to the appellant. In the present case on the face of it, no 10 days notice was given after taking the possession. The same Act of the I.O was wholly contrary to the mandatory rule, practice, procedure, PMLA is a Special Act, all Section and Rules are strictly to be complied with. Therefore, it is held that the possession taken by the Respondent is contrary mandatory provisions of the PML Act and the said possession stand restored to the appellants forthwith. There is no investigation any evidence is available on record that the appellant is likely to conceal the property reason to believe are separately recorded by the respondent. Nor any cognizance of schedule offence is taken against the appellant in the complaint filed against the party. The appellant is not arrayed as party in the complaint - The case of the respondent is that it was unaccounted money. The assessment order has already attained finality. How unaccounted can became proceed of crime when there is no FIR or charge sheet under the schedule offence under Section 420 and 120B was registered against the appellant. Section 23 of the PMLA provides for a rebuttable presumption to be proved to the satisfaction of the Adjudicating Authority. But the Respondent never took this plea before the Adjudicating Authority and the Impugned Order is also not based on such presumption u/s 23 of the PMLA. The impugned order is passed without application of law and facts involved in the matter - The property was attached in haste, possession is taken in haste (without compliance of mandatory provisions). The issue raised by the appellant has not been legally dealt with or decided. Thus, as far as attachment of property is concerned, the attachment stands quashed - appeal allowed.
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Service Tax
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2019 (9) TMI 1107
Works contract service - Site Formation and Clearance, Excavation, Earthmoving and Demolition Service - execution of Works Contract with M/s Power Grid Corporation of India Ltd. for setting up of 400/220 KV Sub-Stations - period May 2006 to September 2007 - extended period of limitation - HELD THAT:- The substantial portion of the payment goes towards Earth work in filling with borrowed Earth. As the contract contemplates various items of works along with the cost of material involved. The appellants placed on record proof of payment of VAT on the subject contract under Kerala VAT which recognises the contract to be Works Contract - Therefore, in view of the Hon ble Supreme Court s decision in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] the contract is to bee seen as a non-viviceptable contract and therefore, it is not chargeable to Service Tax before 01.06.2007. Thus, the contract being indivisible, no Service Tax can be levied upon the appellants before 01.06.2007. Time limitation - HELD THAT:- As we find that the appellant has a strong case on merits, we are not going into the issue of limitation. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1105
Effective date for amendments in respect of service tax on supply of tangible goods - Since the respondent is not appearing by learned Counsel, service and issuance of notice of the appeal to be issued and served by 30th September, 2019. Learned advocate-on-record for the appellant is directed to file an informal paper book by 22nd November, 2019, serving a copy thereof upon the advocate-on record for the respondent not later than seven days before the date of hearing of the appeal. List this appeal on 4th December, 2019.
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2019 (9) TMI 1099
Maintainability of appeal - Business Auxiliary Service - commission received from M/s. Amadeus India Pvt. Ltd. for booking of tickets through Computerized Reservation Booking System (CRBS) - HELD THAT:- Office objection(s) regarding court fee be cured within four weeks from today, failing which the appeal shall stand dismissed for non-prosecution without further reference to the Court. List the matter after four weeks.
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2019 (9) TMI 1088
Demand of Service tax - amount not received - respondent assessee, Indian Oil Corporation transported oil by pipeline from Bongaigaon to its Haldia refinery - HELD THAT:- Mr. Chakraborty, learned senior counsel appearing for the respondent submits that the service tax was payable on the amount received and not receivable. Since no amount was received, service tax was not paid - The lower adjudication authorities accepted this argument and did not entertain the demand of the appellant. Application dismissed.
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Central Excise
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2019 (9) TMI 1106
Refund of CENVAT Credit - Rule 5 of CCR, 2004 - Duty drawback claimed for export goods - Department s case is that no refund of credit should be allowed to the manufacturer if any drawback whatsoever is claimed in respect of the goods which are exported and therefore the first appellate authority has erred in sanctioning refund under Rule 5 - HELD THAT:- A plain reading of the proviso to Rule 5 shows that refund of credit shall not be allowed only if drawback has been availed in respect of such duty. Such duty in this case refers only to the excise duty because there is no mechanism of granting Cenvat credit of the basic customs duty. In this case, since the drawback scheme itself has provided for a single rate of drawback, which, according to the clarification in the Notification 110/2015-CUS dated 16.11.2015, means only customs duty drawback, it is impossible that the respondents could have availed drawback of central excise duty. Therefore, there is no prohibition in refund of Cenvat credit on inputs or input services in respect of the goods which are exported. Refund allowed - Appeal dismissed - decided against Revenue.
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2019 (9) TMI 1104
Maintainability of appeal - requirement with the pre-deposit - Section 35F of the Central Excise Act, 1944 - HELD THAT:- A reading of Section 35F of the Central Excise Act reveals, by the usage of the peremptory words shall not therein, that there is an absolute bar on the CESTAT entertaining any appeal, under Section 35 of the said Act, unless the appellant has deposited 7.5 % of the duty confirmed against it by the authority below - The two provisos in Section 35F relax the rigour of this command only in two respects, the first being that the amount to be deposited would not exceed ₹ 10 crores, and the second being that the requirement of pre-deposit would not apply to stay applications or appeals pending before any authority before the commencement of the Finance (No.2) Act, 2014, i.e. before 6th August, 2014. The prayer of the petitioner for being permitted to prosecute its appeal before the CESTAT without complying with the condition of mandatory pre-deposit, cannot be granted - Petition dismissed.
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2019 (9) TMI 1051
CENVAT Credit - denied on the ground that their activity does not amounts to manufacture - HELD THAT:- Through the majority decision of the Tribunal in the case of ASIAN COLOUR COATED ISPAT LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III [ 2014 (9) TMI 974 - CESTAT NEW DELHI] , it was held that where the final product stands cleared on payment of duty, the Cenvat credit availed by the assessee cannot be denied on the ground that the activity was not covered by the definition of manufacture - there is no justification for confirmation of said demand. Clandestine removal - demand solely based upon the duty paid by the appellant on the scrap arisen in their factory - HELD THAT:- Since the appellant was manufacturing their final products of different variety i.e. stainless steel, alloys steel as also non alloy steel, scrap of different verities originated at the various stages and was collected and sold as stainless scrap at the higher rate, so as to avoid any objection by the revenue. He submits that on the said basis it cannot be concluded that the appellants have clandestinely manufactured their final product of stainless steel only - also, revenue has not advanced any evidence like the procurement to raw material, the actual manufacture of goods of stainless steel and clearance of the same to the buyers, who had not been identified, the transportation of the goods or receipt of consideration. Confirmation of such huge demand of duty on the basis that the scrap sold by the appellant which was actually mixed scrap, by applying the rate of duty as applicable to stainless steel scrap, is against the settled principal of law that the allegations and findings of clandestine removal are required to be upheld on the basis of sufficient, affirmative and tangible evidences for which the onus lies upon the revenue. There is not even an iota of evidence on record to that effect - demand set aside. CENVAT credit - furnace oil - HELD THAT:- It stands explained before us that Heat treatment preheating furnace, furnish oil is being used by the assesse, which stand has not been rebutted by revenue by production of any evidence to contrary - demand not sustainable. Extended period of limitation - HELD THAT:- The audit took place in the appellant s factory during the period 23rd August, 2013 to 26 August, 2013 whereas show cause notice stand issued on 19.02.2015 i.e. after the normal period of limitation - the notice is also barred by limitation. Appeal allowed on merits as well as on limitation.
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2019 (9) TMI 1050
Demand of Interest and penalty - appellant already reversed irregularly availed CENVAT Credit - HELD THAT:- The appellant was having sufficient balance in Cenvat credit account during the intervening period - In that circumstances, relying on the decision of BILL FORGE PVT. LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [ 2010 (2) TMI 403 - CESTAT, BANGALORE] , It is held that the appellant is not liable for pay the interest for the intervening period. As it is the bonafied understanding of the appellant that being their head office located in the Bombay, they are entitled to take Cenvat credit on distribution of Cenvat credit by the head office - the penalty on the appellant is not imposable.
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CST, VAT & Sales Tax
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2019 (9) TMI 1103
Imposition of penalties u/s 15-A(1)(a) of the U.P. Trade Tax Act, 1948 - voluntary delayed deposit of entry tax - HELD THAT:- Revisionist have stated that a huge amount was spent in paying the statutory liability to the Cane Growers and also that during the said period they had purchased new machinery which had incurred huge liability and therefore they deposited the amount of tax, but there was some delay and therefore they are fully covered with the provisions contained in Section 15-A (1)(a) of the Trade Tax Act - Therefore, I am of the considered view that a reasonable cause has been shown for not depositing the tax within the prescribed time. The order of the Commercial Tax Tribunal dated 25.05.2005 in this regard is therefore, set-aside. Revision allowed.
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2019 (9) TMI 1095
De-freezeing/de-sealing of bank account - finalization of assessment proceedings - Section 34 of the Haryana Value Added Tax Act, 2003 - HELD THAT:- it is submitted that the same authority has issued directions for the release of the bank account(s) of the petitioner It is agreed by the counsel for petitioner that nothing more survives for adjudication in the present writ petition and the same has become infructuous. Appeal dismissed as infructuous.
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2019 (9) TMI 1094
Maintainability of appeal - vires of Section 33 of HVAT Act 2003 - declaration of 'C' Forms - non fulfilling of statutory requirement under Section 33 (5) of HVAT Act 2003 - HELD THAT:- At the time of arguments, realising that vires cannot be challenged in appeal, learned counsel for appellant prays for permission to withdraw present appeal to enable his client to file writ petition. Appeal dismissed as withdrawn.
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2019 (9) TMI 1084
Finalization of revised assessment - Section 25(1) of the KVAT Act - it was alleged that the impugned proceedings were finalised without affording the appellant an opportunity of personal hearing, after filing of objections to the proposal notices - HELD THAT:- We make it clear that the direction contained in the impugned judgment to the Assessing Authority to complete the assessment, need not be taken as a positive direction to the authority to re-open the assessment and to make fresh assessment against the appellant. Since the matter is remanded with direction to afford opportunity for personal hearing, it is for the Assessing Authority to decide the mater on its merits, after taking into consideration of the objections filed as well as the documents if any produced, and also after taking note of the settled legal position on the points agitated. Appeal disposed off.
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2019 (9) TMI 1083
Extension of time limit for initiating proceedings - Section 25(1) of the Kerala Value Added Tax Act, 2003 - availability of alternate remedy - HELD THAT:- The appellant is permitted to challenge Exts.P10 and P11 before the appropriate Appellate Authority. If the appellant files properly constituted appeals against those orders before the appropriate Appellate Authority, within a period of three weeks from the date of receipt of a certified copy of this judgment, such authority shall accept those appeals as if it is filed within the time limit stipulated. Appeal allowed.
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2019 (9) TMI 1082
Liability of VAT - taxable event - Recovery of facility charge - facility charge was for the provision, operation and maintenance of the plant, pipelines and the meter. - It is a specific case of the petitioner is that it has discharged its liability of payment of value added tax (VAT) on the consideration received for supply of gases and no VAT amount was leviable and/or charged from the petitioner prior to the present assessment years in dispute on the amount of facility charge recovered by it from Tata Steel Ltd. for providing facilities. HELD THAT:- We are not in agreement with the contention of the petitioner-counsel that the facility charge and the gas price are distinct and separate from each other as the contractual provision itself clarify that there is inter-dependency of the gas prices with the facility charges and both are linked to each other. In the instant case, the facility charge is a consideration passing from the purchaser (Tata Steel Limited) to the dealer (Linde India Limited) in relation to the sale of gases. According to the agreement, the freight charges are being taken for the provision, operation and maintenance of the plant, the pipelines and the meters. All the three constituents are important for selling gases by the petitioner to Tata Steel Limited and in their absence sale may not be complete. The plant is important for producing the saleable goods, the pipeline is important for transporting the saleable goods and the meter is important for calculating the total quantity of goods sold - Accordingly, facility charges are directly relatable to sale of goods by the petitioner to Tata Steel Limited and is a consideration passing from Tata Steel Limited to the petition for sale of goods. Thus is ample clear that taxable event in case of Central Excise and Sales Tax is different. While manufacture is the event in case of Central Excise; the taxable event in the case of VAT is sale . The Facility Charge levied by the petitioner company is towards consideration of sale of gases and is exigible to value added tax - application dismissed.
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Wealth tax
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2019 (9) TMI 1102
Non filing of return of wealth under Wealth Tax Act - Penalty levied u/s 18(1)(c) of the Wealth Tax Act - HELD THAT:- Assessee did not file return of wealth under Wealth Tax Act voluntarily. The assessee did not dispute the service of notice u/s 17(1) of the Wealth Tax Act before the AO at assessment proceedings or otherwise. Therefore it is a fit case of levy of penalty u/s 18(1)(c) of the Wealth Tax Act. Therefore agree with the view of the Ld Accountant Member that penalty be imposed against the assessee. Dismiss all the appeals of the assessee. Let the files be put up before the regular bench for passing the consequential order.
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Indian Laws
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2019 (9) TMI 1101
Smuggling - Cocaine - section 37 of NDPS Act - offence punishable under Section 8 read with Sections 21 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - release of accused on bail - HELD THAT:- Section 37 of the NDPS Act says that twin-conditions have to be adhered to by the court while dealing with the parameters of Section 439 of Cr.PC. The NDPS Act is an Act enacted with an object to make stringent provision for control, regulation and operation relating to NDPS Act. It is a special enactment, Section 37 of the Act, states that a non-abstante clause and is in negative terms limiting the scope and applicability of the provision of criminal procedure for bail. The non abstante clause with which Section 439 of Cr.PC., should be given with true manner and clearly it is intended to restrict the power to grant bail. The power to grant bail under any of the provisions of Cr.p.c. should necessarily be subject to the conditions mentioned in Section 37 of the NDPS Act. It is clear that Section 37(b)(i) (ii) of the Act are the specific limitation prescribed under the provision i.e., the Public Prosecutor has to be given an opportunity to oppose the application and secondly, the court must satisfy itself that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. The non compliance of mandatory provisions are also to be taken into consideration by the courts while dealing with the bail matters particularly u/s.37 of the Act. If the mandatory provisions are not strictly followed, if it would otherwise prejudice the accused, in such an eventuality, the rigor of Section 37 of the NDPS Act will be diluted in such an eventuality, the accused may be entitled to be released on bail. Under section 37 of the Act, the court has to tentatively make an evaluation to find out that, the accused was not guilty for the purpose of granting bail. If any doubt arises, in such an eventuality, an opportunity should be given to the prosecution to establish the same - In this particular case also, the quantitative analysis is also detected i.e., the entire 400 grams contained Cocaine and out of that, 5 grams was taken out in the presence of the panch witnesses. When such prima facie material is available, it cannot be said that merely because quantitative analysis report has not beenreceived, in any manner takes away the test conducted by the NCB officials by using the Field Drug Detection Kit tentatively and that the pouches contained 400 grams of Cocaine and out of that 5 grams of each were taken for the purpose of qualitative analysis. The accused is not guilty of the offence alleged against her - she is not entitled to be enlarged on bail - petition dismissed.
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