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Showing 41 to 60 of 914 Records
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2020 (4) TMI 874 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
Rate of tax - Benefit Composition Scheme available or not - Supply of services and goods - appellant engaged in the business of supplying goods under the trade name “Empathic Trading Centre” and is also a supplier of ser-vice of renting of immovable property - rate of composition tax applicable is 1% for the turnover of goods (sales) and 6% for the turnover of service (rent) - HELD THAT:- The applicant admittedly is supplying services and hence the eligibility for composition scheme is dependent on the satisfaction of the condition stipulated in the second proviso to sub-section (1) of section 10. If the turnover of services of the applicant exceeds ten per cent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher, then he shall not be eligible to composition scheme. Even if the applicant obtains separate registration, one for the goods and other for the services, he would not be eligible for composition for both the lines of business. Hence the applicant is not eligible for composition under section 10 of the CGST Act if the turnover of services of the applicant exceeds ₹ 5 Lakhs or ten percent of turnover is the state, whichever is higher.
N/N. 2/ 2019 - Central Tax (Rate) dated 07.03.2019 - HELD THAT:- The said notification prescribes the rate of tax for the “first supplies of goods or services or both upto an aggregate turnover of fifty lakh rupees made on or after the 1st day of April in any financial year, by a registered person” and is not issued under section 10 of the CGST Act, 2017. Hence it is not a composition scheme but is an optional scheme.
If the applicant opts out of the Composition levy and he obtains separate registrations for the two lines of business, as per second condition, he shall be liable to pay tax at 3% CGST and 3% SGST on the each of the turnovers of the registrations. The tax is on the entire aggregate turnover i.e all the “first supplies of goods or services or both upto an aggregate turnover of ₹ 50 Lakhs”. Hence the applicant is liable to pay tax under CGST Act at 3% and at 3% under KGST Act, if he opts to pay tax under the said Notification after opting out of Composition levy on the entire value of supplies made and he cannot apply different schemes for different types of transactions.
Thus, the applicant is eligible to be in the composition scheme under section 10 of the CGST Act, 2017 if the turnover of services of the applicant does not exceed ten per cent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.
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2020 (4) TMI 873 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
Levy of GST - selling of religious books - Classification of goods - rate of GST - Exempt goods or not - HELD THAT:- The supply is made by the applicant to the Madarasas for a consideration and the contract is for the supply of books for consideration. This being in the course of business would amount to a supply of books as per sub-section (1) of section 7 of the Central Goods and Services Tax Act, 2017. There is no direct link between the recipient of books and the supplier of the content and the final product is supplied to the recipient of books and the content provider has no role to play in the selection of the recipient or the sale. Hence it is sale simpliciter of books.
HSN Code - rate of tax - HELD THAT:- The printed books are covered under the HSN Code 4901 10 10 and are covered under entry no. 119 of Notification No.2/2017- Central Tax (Rate)dated 28.06.2017 and hence are exempt from tax under the CGST Act, 2017. Further they are covered under entry no. 119 of Notification (02/2017) No. FD 48 CSL 2017 dated 29.06.2017 and hence exempted from the Karnataka Goods and Services Tax Act, 2017 - The inter-State supply of printed books are exempt under the IGST Act, 2017 as they are covered under entry no. 119 of Notification No.2/2017 -Integrated Tax (Rate) dated 28.06.2017.
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2020 (4) TMI 872 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
Classification of supply - supply of goods or not - software supplied by the applicant - Computer Software or not - Applicability of N/N. 45/2017-Central Tax (Rate) and 47/2017-Integrated Tax (Rate) dated 14.11.17 to the supplies made to the institutions given in the notification - HELD THAT:- The applicant states that he purchases the off-the-shelf software which are not developed for any specific client and the same software is sold to all the clients. Hence the software sold by the applicant is a pre-developed or pre-designed software and made available through the use of encryption keys and hence it satisfies all the conditions that are required to be satisfied to cover them under the definition of “goods”. Further, the goods which are supplied by the applicant cannot be used without the aid of the computer and has to be loaded on a computer and then after activation, would become usable and hence the goods supplied is “computer software” and more specifically covered under “Application Software”. Hence the supply made by the applicant is covered under “supply of goods” and the goods supplied are covered under the HSN 8523.
Applicability of N/N. 45/2017- Central Tax (Rate) dated 14th November, 2017 - HELD THAT:- The computer software are covered in the column (3) of the Table present in the Notification No. 45/2017 - Central Tax (Rate) dated 14th November, 2017 as amended from time to time. If they are sold to such recipients as covered under Column (2) of the Notification and if they are satisfies the conditions specified in Column (4) of the Notification, then the supply of such computer software would be liable to tax at 2.5% under the CGST Act.
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2020 (4) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
Classification of services - Healthcare Services or not - Human Leukocyte Antigen (TILA) testing services performed by the overseas laboratory outside India on the Human Buccal Swabs sent by DKMS-BMST from India - entry no.74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The service of HLA typing is to identify the potential donors and is related directly to a transplantation to be done on a future date to a patient requiring such transplant. Analogous to testing of Blood Group, HLA typing identifies the alleles of the donor and these alleles are matched with the alleles of the recipient of transplant. The applicant gets the HLA of the potential donors typed and uploaded to the databases for the doctors to identify the potential donors. Hence the service is to received only to shortlist the potential donors and increase chances of getting the perfect donors from a big list of potential donors and going through the entire process of testing ab initio and matching between the patient and the donor individually - Other than for obtaining an organ from a potential donor, this HLA testing is not done for any other purpose in clinical set up and hence this is a for the treatment of an illness, the same is covered under “health care services” as per the definition given to it.
Whether the supplier of services is a clinical establishment, the term “clinical establishment” is defined in paragraph 2 of Notification No.12 /2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- It is seen that the HLA testing involves various tests which are for the identification of the alleles of the donor cells and also the suitability of the potential donor for treatment of a patient of illness, i.e. blood cancer and other blood disorders. Hence any institution which does these investigative services would be covered under the definition of “clinical establishment” as contemplated in the said definition. Hence, the LSL DE is a clinical establishment under the meaning given to it - Hence the services provided by LSL DE to the applicant in the form of HLA Typing would be covered under “Health Care Services by a Clinical Establishment” and hence is exempt from tax under the IGST Act.
Reverse Charge mechanism - HELD THAT:- Since the service itself is exempt, the applicant is not liable to pay tax on the services obtained in the form of HLA testing and typing from LSL DE on reverse charge basis.
Applicability of tax based on the contention of the applicant that the entire service is provided outside India - HELD THAT:- The issue involves the determination of the place of supply which is outside the mandate provided to this Authority and hence no discussion is made on this issue.
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2020 (4) TMI 870 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA
Classification of goods - rate of tax - sale of Poha Bran or Avalakki Bran or Bran of beaten rice which supplied to cattle feed manufacturing units - Taxability - HELD THAT:- The said poha bran is nothing but rice bran and is by product of Poha or Avalakki manufacturing process from paddy. Both rice bran and poha bran are derived from Paddy and the constituents of both are same. They are given different commercial narnes due to the different process of manufacture which give rise to them. Both are used as ingredient for manufacturing of cattle feed. The composition of the poha bran contains oil to the extent of 3 to 4 % and fibre to the extent of 35%. Hence poha bran is nothing but Rice bran - As for as classification of Poha bran is concerned the said goods can be classified under HSN chapter /heading vide HSN 2302 40 00. The present classification applied by the applicant for Poha bran under HSN 2304 00 90 is incorrect as it is applicable to those from soyabean.
Taxability - HELD THAT:- The poha bran, which is same as Rice bran is covered under entry no. 103B of Schedule I of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 6/2018 - Central Tax (Rate) dated 25.01.2018 and the same is liable to tax at 2.5% from 25.01.2018 under the CGST Act. Similarly the same is also liable to tax at 2.5% under the KGST Act, 2017 from 25.01.2018.
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2020 (4) TMI 869 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA
Levy of GST - Administration fees - post connection fees - pre-connection fees - same matter pending decision - HELD THAT:- The applicant will fix and recover non-tariff charges as per provisions of the Karnataka Electricity Act 2003 and regulations of the KERC and Karnataka Electricity Regulatory Commission (KERC) 1999 - As per Circular no. 34/8/2018-GST dated 1st March, 2018 issued by Ministry of Finance, Government of India, it was clarified that the services by way of transmission or distribution of electricity by an electricity transmission or distribution utility is only exempted as per entry number 25 of notification No. 12/2017- CT (R) dated 28.06.2017 and other services provided by the applicant to consumer are taxable - it was clarified in the circular that the other services such as meter rent, application fees, testing fees for meters etc. provided by these companies to their consumers are taxable.
The facts of the judgment is narrated that the ancillary charges collected by Electricity Distribution Company towards application fee, meter rent, other pre and post connection charges for shifting of lines, etc are covered by entry 25 of exemption notification number 12/2017-Central Tax (Rate) dated 28-06-2017 relating to transmission and distribution of electricity. Hence the same would constitute composite supply as per section 8 of the GST Act.
The issue of the exemption activities carried out by the applicant with reference to administration and Pre and Post connection charges towards supply of electricity is pending before Honorable Supreme Court of India vide UNION OF INDIA AND ORS. VERSUS TORRENT POWER LTD. AND ANR. [2019 (8) TMI 779 - SC ORDER] - Since the matter is sub-judice therefore advance ruling on aforesaid issue cannot be given.
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2020 (4) TMI 868 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
Classification of supply - Composite Supply or independent of supply of power packs - supply of powerpacks, freight and insurance service and commissioning/ installation services - freight and insurance service and commissioning / Installation - HELD THAT:- The supply of installation and commissioning service would be and independent service and is not a part of the composite supply. The rate of tax applicable to the installation and commissioning service needs to be applied for such supply of service.
The applicant has to transport the goods and deliver the power packs to the recipient and the amount charged to do this is a part of the value of the goods supplied. Hence the freight and insurance charges are part of the value of supply of power packs, since the supply contract is a contract for supply of power packs and the value of the contract is the sum total of the value of the power pack plus all charges charged to the recipient for anything done till the goods are delivered to the recipient - Even if these supplies, i.e. supply of power pack and supply of freight and insurance are distinct supplies, the same would be covered under the definition of “composite supply” as per section 2(30) of the CGST Act, 2017, as the same are naturally bundled and supplied in conjunction with each other in the ordinary course of business - The principal supply in the case is the supply of power packs.
Thus, the supply of power packs and the supply of freight and insurance services involved in such power packs shall be treated as the “supply of power packs” and the applicable tax related to such power packs and the time of supply would apply to the entire transaction as it applies to the “supply of power packs”.
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2020 (4) TMI 867 - MADHYA PRADESH HIGH COURT1
Nature of activity - sale or service - photography service - use of the paper upon which an image is printed using certain consumables and chemicals - interpretation of term ‘sale’ appearing in exemption Notification No.12/03-ST dated 20.06.2003, is to be given the same meaning as given by Section 2(h) of the Central Excise Act, 1944, read with Section 65(121) of the Finance Act, 1994 - deemed sale - HELD THAT:- Identical substantial questions of law have been answered in favour of the assessee [2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT]
The Supreme Court in the matter of Safety Retreading Company [2017 (1) TMI 1110 - SUPREME COURT] has considered the similar issue. The Apex Court set aside the majority view of the Special Bench of the Tribunal and held that component of gross turnover in respect of which assessee had paid taxes under local Act with which it is registered as works contractor is excluded from service tax. It has been further held that in a contract of retreading of tyres, it cannot be said that there is no sale or deemed sale of parts or other materials used in the execution of contract of repairs and maintenance - demand withheld.
The substantial questions of law are answered in favour of the assessee - Appeal allowed.
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2020 (4) TMI 866 - ITAT DELHI
Bogus transaction relating to sale of the jewellery - addition made on account of accommodation entry - HELD THAT:- As decided in Anil Kumar Bansal and Nagar Mal Bansal [2018 (5) TMI 1991 - ITAT DELHI] for giving independent finding of the fact whether the sale of jewellery by the assessee is a genuine transaction or not , the matter need to be restored to the file of the Assessing Officer. We order accordingly and direct the Assessing Officer to decide the issue following the direction of the Tribunal given in order of the tribunal in the case of Gunvir Kumar Jain [2018 (4) TMI 398 - ITAT DELHI]. - Revenue appeal allowed for statistical purposes.
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2020 (4) TMI 865 - NATIONAL COMPANY LAW TRIBUNAL, CHANDIGARH BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - Time Limitation - HELD THAT:- It can be seen that the Operational Creditor has served demand notice in Form 4 dated 04-01-2018 upon the Corporate Debtor successfully. The speed post receipt along with the tracking report showing the delivery of the demand notice is found attached as Annexure-D of the petition. It is observed that the Corporate Debtor has chosen not to reply to the above stated demand notice. It could also be seen that if any dispute as to the outstanding due was there, the same could have been stated in the reply to the demand notice by the Corporate Debtor. Therefore, the pleading of the Corporate Debtor challenging the veracity of the invoices raised by the Operational Creditor lacks force.
Time Limitation - HELD THAT:- The Operational Creditor has attached the bank statement of ICICI Bank (Page 148 of the petition) wherein it could be seen that the last payment of ₹ 50,000/- dated 22-07-2015 has been received by the Corporate Debtor from which it could be presumed that the same was received in lieu of the services provided by the Operational Creditor. It could also be inferred from the ledger of the Corporate Debtor (Page 20 of the petition) that the due date for the payment for the last invoice raised on 23-07-2015 is 22-08-2015. It is therefore held that the period of limitation starts from the date 22-08-2015 itself and the petition is very well within the limitation period as the petition has been filed on 17-08-2018 with this Tribunal.
The operational debt remains unpaid, the demand notice was delivered to the corporate debtor and reply was received within the stipulated 10 days period. In view of the satisfaction of the conditions provided for in section 9(5)(i) of the Code, the petition for initiation of CIRP is deserves to be admitted - petition admitted - moratorium declared.
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2020 (4) TMI 864 - NATIONAL COMPANY LAW TRIBUNAL, CHANDIGARH BENCH
Approval of Resolution Plan - time limitation of the process - expiry of the process - the CIRP is stated to have expired on 8-7-2019 and no resolution plan under section 30 (6) of the Code was received by the AA before that date - HELD THAT:- In the instant application filed by the RP, it is stated that despite issue of invitation for Expression of Interest in Form G on 26-12-2018 with last date of submission as 31-1-2019 and extension of the last date to 20-2-2019, three Expressions of Interest were received. It is further stated that despite the last date of 2-4-2019 for submission of resolution plans and extension of the date twice to 3-6-2019, no resolution plan was received. No resolution plans are stated to be received even on 08-11-2019, when the 14th meeting of CoC was convened.
It is stated in the instant application that since Agenda Item No. 7 relating to appointing a Liquidator and approving the fees to be paid to the Liquidator was not approved by the CoC in its 14th meeting held on 08-11-2019, the applicant has not given his consent to act as a Liquidator and the AA may appoint a Liquidator for Isolux in terms of section 34 (4) (c) of the Code. On the failure of the RP Shri Vikram Kumar to submit the written consent, the AA is empowered under section 34 (4) of the Code to replace the RP by following the procedure provided for in section 34 (5) to (7) of the Code.
As regards Regulation 39B, the CoC did not approve any plan for providing contribution for meeting the difference between the excess of estimated liquidation costs over the liquid assets and was of the view that the estimated liquidation costs can be approved quarterly in the stakeholder consultation committee to be constituted as per Regulation 31A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Process Regulations, 2016).
The plan under Regulation 39B (3) of the CIRP Regulations, 2016 has not been approved by the CoC - After taking into consideration the discussion by the CoC in the 14th meeting held on 08-11-2019, the Liquidator may take necessary action under Regulation 2A of the Liquidation Process Regulations, 2016.
It is directed that all the directions/requirements and provisions of Chapter III of the Code and Liquidation Process Regulations, 2016 shall be strictly complied with.
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2020 (4) TMI 863 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Tribunal admits this Petition and orders initiation of CIRP against the Corporate Debtor.
Application admitted - moratorium declared.
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2020 (4) TMI 862 - MADRAS HIGH COURT
Exemption u/s 11 - entitled to registration as Charitable Trust under Section 12AA read with Section 80G - HELD THAT:- The issue involved in this case is no longer res integra and has been decided by the Coordinate Bench of this Court in the case of “Director of Income Tax (Exemptions) -Vs- Seervi Samaj Tambaram Trust” [2014 (2) TMI 32 - MADRAS HIGH COURT] following the Supreme Court decision in the case of “Commissioner of Income Tax -Vs- Upper Ganges Sugar Mills Ltd. [1997 (8) TMI 4 - SUPREME COURT] and another case decided by the Honourable Supreme Court in “State of Kerala -Vs- MP.Shantiverma Jain” [1998 (5) TMI 24 - SUPREME COURT] in which the Honourable Supreme Court has held that the Income Tax Act, 1961 does not make any distinction with regard to the objectives of the Charitable and Religious purposes and the Trusts having both these objectives can also be registered under Section 11 or 12AA of the Act.
Tribunal was justified in allowing the appeal filed by the Assessee and upholding the registration of the Trust under Section 12AA read with Section 80G of the Act. The appeal filed by the Revenue is devoid of any merits - Decided in favour of assessee.
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2020 (4) TMI 861 - MADHYA PRADESH HIGH COURT
Exemption u/s 11 - CIT jurisdiction to cancel the registration certification granted in favour of a trust in exercise of power u/s 12-A - HELD THAT:- Such power could be exercised by the CIT only on and after 1.10.2004 as the amendment in question was not retrospective but is prospective in nature. Similar is the position in the present case also. On 15.10.2001, the assessee was granted registration by the CIT u/s 12A and the exemption under Section 80G on 18.3.2002. The order withdrawing the said registration with retrospective effect was passed by the CIT on 12.8.2003 i.e. much prior to coming into force of the aforesaid amendment enacting sub-section (3) in Section 12AA of the Act conferring the powers on the CIT to withdraw/cancel/recall the registration granted by him to any firm/trust/society. Indeed, the functions exercisable by the CIT u/s 12A are neither legislative nor executive but as mentioned above they are essentially quasi judicial in nature. It is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him u/s 12A of the Act till the power was expressly conferred on the CIT by Section 12AA (3) of the Act w.e.f. 1.10.2004.
Since the Supreme Court in Industrial Infrastructure Development Corporation [2018 (2) TMI 1220 - SUPREME COURT] had already held that the amendment in question was not retrospective but was prospective in nature, it would be deemed that in the present case also the CIT at the time of passing the aforesaid orders had no express power to recall/withdraw registration certificate granted to the assessee trust. The substantial question of law framed is thus, answered accordingly. - Decided against the revenue.
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2020 (4) TMI 860 - MADHYA PRADESH HIGH COURT
Reopening of assessment u/s 147 - reasons to suspect OR reasons to believe - HELD THAT:- As noticed that the AO had reopened the case without any evidence and that too after the block assessment was over and even the regular assessment u/s 143(3) was also completed. There was no evidence found during the course of search that there was undisclosed production - no information was available with the Revenue that there was unaccounted production. Tribunal concurred with the view of CIT(A) and in this view of the matter, dismissed the appeal of the Revenue holding that it was not a case for suppressed production as per the process of manufacturing which is applied in production of Beer.
As noticed that even the Kerala State Excise Mannual which was applied by the AO in the case of the assessee who was operating in State of Madhya Pradesh, was of no help to the reasoning given by the Assessing Officer, as it was a case of pretence and reasons to suspect only.
Power u/s 147 cannot be exercised merely on reason of suspicion but there should be reason to believe. Therefore, keeping in view the findings recorded by the CIT(A) which have been affirmed by the learned Tribunal and considering the same on the touchstone and anvil of the arguments advanced by the learned counsel for the appellant-Revenue, we find no reason to differ, as no illegality or perversity has been pointed out by learned counsel for the Revenue in the aforesaid findings of fact, which may warrant interference by this Court. - Decided in favour of assessee.
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2020 (4) TMI 859 - MADHYA PRADESH HIGH COURT
Contribution to National H.V..D.C. Project - Deduction u/s 37(1) - Allowable revenue expenditure - HELD THAT:- There was material before the AO to adjudge the admissibility of the said deduction in favour of the assessee particularly when the said step taken by the assessee was in accordance with Section 24 of the Electricity (Supply) Act, 1948 which was applicable to assessee. Section 24 of the said Act enabled the Electricity Board to subscribe to associations constituted for the purpose conducive to development of electricity and promotion of common interest of persons engaged in generation, distribution and supply of electricity.
The provision was also considered by the AO but without dealing with the same, he held the said subscription to be of capital nature and/or by way of donation - expenses/grant-in-aid was in conformity with Section 24 of the Electricity Act, as stated above which required the assessee to subscribe to the associations constituted for the purpose conducive to development of electricity. Thus expenditure in question was to be allowed u/s 37(1) as the same was incurred in ordinary course of the business of the assessee and as a part of obligation to its consumers to develop electricity - contribution was made as per the order of the Government of India and it was wholly, necessarily and exclusively for the purpose of business. It was not a voluntary contribution/donation but was given on specific directions of the Government of India. In this view of the matter, we do not find any error in the finding recorded by the learned Tribunal in this regard.
Addition of Provident Fund which was not paid on due date under section 36(1)(va) - HELD THAT:- Assessee had got exemption from depositing the money with the Provident Fund Commissioner and instead, was allowed to deposit the same with the P.F. Trust and as per Regulation 11 of the PF Regulations which are applicable to the respondent, there is no specific date for deposit of the provident fund by the Board. In M.P.E.B.’s case [2015 (7) TMI 1350 - ITAT JABALPUR]which has been relied upon by learned counsel for the assessee, similar question raised by the Revenue was answered against them on the basis of order dated 30.12.2010 passed by the Assessing Officer accepting the same principle in respect of assessment year 2003-2004. Thus, there is nothing to take any different view in the present case.
In view of the foregoing reasons in addition to the findings recorded by the learned Tribunal coupled with the view taken by the Division Bench of this Court in M.P.E.B.’s case [2015 (7) TMI 1350 - ITAT JABALPUR], we do not find any case is made out in favour of the Revenue.
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2020 (4) TMI 858 - ITAT MUMBAI
Reopening of assessment u/s 147 - addition of excess allowance of income from tonnage tax - computing the non taxable relevant shipping income u/s 115VI(1) - HELD THAT:- The notice u/s 148 has been issued by the AO in the instant case, within a period of four years from the end of the relevant assessment year. As the AO formed an opinion that the above income is not derived either from the core or from the incidental activities as envisaged u/s 115VI, he has rightly issued notice u/s 148 of the Act. Thus, we dismiss the grounds of appeal raised by the assessee against the reopening made by the AO.
Section 115VF provides that a tonnage tax company shall offer its tonnage income computed as per the Act for tax and it further gives exemption from tax to the relevant shipping income of such tonnage tax company. The relevant shipping income has been defined in section 115VI of the Act, as profit derived from core activities or incidental activities. While the incidental activities are exhaustive list provided in Rule 11R of the I.T. Rules, the core activities are inter alia activities from operating ships. We find that in the instant case the interest income on fixed deposits with the banks arises because of bank guarantee that the assessee has given to its clients, including Performance guarantees, bid bond guarantees etc.
If the assessee was not undertaking the business of operating ships, it would not have received the interest on fixed deposits kept as guarantees - fixed deposits made in pursuance of guarantee which lead to interest income is directly related to the activity of the assessee of operating ships - these bank guarantees pertain to qualifying as well as non qualifying ships and in the absence of clear bifurcation between the guarantees, the interest income has to be apportioned at 36.44% to determine the part of the relevant shipping income for the assessee.
The assessee has claimed 36.44% of the total receipt from insurance claim amounting to ₹ 29.74 lakhs as exempt income. In the instant case, the sums pertaining to insurance claim are amounts expended for the repair of the vessel parts and regular maintenance of the vessels. These vessels are deployed for the business of the assessee of operating ships. As the insurance claim are directly related to operation of ships, they have to be considered while arriving at the profits of the tonnage tax company under the Act.
Certain expenditure incurred towards repairs and maintenance of vessels and other core activities relating to operation of ships was no longer required to be paid which lead to writing back of the creditors. As it pertains to qualifying as well as non-qualifying ships, the portion pertaining to relevant shipping income had to be appropriated on 36.44% basis. The writing back of sundry creditors or debtors give rise to income arising due to the activity of operating ships and, therefore, the receipts due to writing back has to be considered when determining profits arrived from core activities u/s 115VI.
As mentioned earlier, the assessee had obtained loan in the foreign currency, the repayment of which lead to accrual of gain due to fluctuation in foreign exchange rate and the loan had been taken by the assessee for acquiring vessels which are its business asset. Hence, the gain being a capital receipt is not chargeable to tax.
We set aside the order of the Ld. CIT(A) and delete the addition of excess allowance of income from tonnage tax made by the AO - assessee is entitled to claim of refund, which is subject to its contentions as stated in the ‘ Statement of Facts’ dated 13.05.2016 filed before the Tribunal that “however, during appellate proceedings before the learned CIT(A), it was submitted that even though the return filed in response to notice u/s 148 shows a lower income than the originally returned income, the learned CIT(A) may give directions to the effect that the assessed income after giving effect to his order can in no case go below the originally returned income, to which proposition the appellant is fully agreeable to” and direct the AO to work it out. - Appeal is partly allowed.
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2020 (4) TMI 857 - ITAT VISAKHAPATNAM
Addition under the head ‘sundry creditors’ - AO treated 20% of the unproved credits - HELD THAT:- Assessee himself has stated before the AO as well as the Ld.CIT(A) that the difference was due to unaccounted sales. The assessee has taken different argument before the ITAT stating there were mistakes in the order of Ld.CIT(A) with regard to unaccounted sales, which is nothing but an afterthought and argued that the assessee is taking inconsistent stand before the CIT(A) and ITAT, hence no credence to be given to the argument of the Ld.AR with regard to submission of factual mistakes. The assessee thought that estimation of gross income would be beneficial to him on unaccounted sales, therefore, submitted before the Ld.CIT(A) that the difference was due to unrecorded sales or the inflation of purchases and stock for bank loan purposes.
When the Ld.CIT(A) has given a clear finding that the assessee failed to produce the purchases book, stock register etc to verify the purchases or the unaccounted sales, the assessee has taken a different stand before the ITAT and argued that the difference was not related to purchase and sales and it was due to the amounts received and the supplies made to the creditor. In any case there was a difference in creditors account which was shown excess credit balance and in the absence of proper reconciliation and the source the entire difference of credit balance required to be brought to tax. Hence argued that no interference is called for in the order of the Ld.CIT(A).
Enhancement of income by the CIT(A) - objection of the assessee that the CIT(A) has enhanced the assessment without giving the enhancement notice - HELD THAT:- AO made the addition of ₹ 47,64,594/- under the head ‘unproved sundry creditors’ and the Ld.CIT(A) confirmed the addition of ₹ 25,50,000/-, thus given part relief to the assessee. Since there was no enhancement of addition made by the AO, there is no case for giving enhancement notice, hence the order passed by the Ld.CIT(A) is within the law. In addition to the above, the Ld.CIT(A) has accepted the written submissions and forwarded the same to the AO. The remand report was furnished to the assessee, calling his objections. As per the remand report, there was a difference of ₹ 25,50,000/- in respect of sundry creditor, M/s Sri Venkateswara Iron Corporation, for which the assessee was given opportunity to explain difference, thus the Ld.CIT(A) has followed all formalities adhering to the principles of natural justice, thus, there is no violation of law. Therefore, we dismiss the ground of the assessee on this issue.
Unaccounted sales - as per assessee certain sale transactions might not have been reflected in the books of accounts as such transactions might have been included in the closing stock itself - HELD THAT:- Before us, the Ld.AR advanced argument stating that there was a factual mistake in the order of the Ld.CIT(A) and the difference was due to payments received. The argument of the assessee is inconsistent and not acceptable without proper reconciliation. The assessee has furnished the account copy for the period 15.06.2013 to 30.10.2013 with brought forward balance, but has not furnished the complete account. However, it is undisputed fact there was a difference of ₹ 25,50,000/- which the assessee has over stated as at the end of the year under consideration and it is the obligation of the assessee to reconcile the difference and explain the reasons for difference with documentary proof. During the appeal hearing, the assessee was asked to explain the difference and reconcile the difference for which the Ld.AR could not offer any explanation. Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld.
Assessment of gross profits @5.58% on the difference amount - In the absence of proper reconciliation and evidence for purchase and sales and sources thereof, estimation of gross profit on the unreconciled difference is correct, hence, we dismiss the grounds raised by the assessee for estimation of gross profit. Assessee appeal dismissed.
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2020 (4) TMI 856 - ITAT KOLKATA
Disallowance of bad debts written off - assessee is in the business of advertising and had written off against “irrecoverable debts” - HELD THAT:- As per section 36(2)(i) in order to claim deduction under section 36(1)(vii) of the Act, the precondition is that the debt or part thereof should have 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 is written off or of an earlier previous years - Assessee has already provided the details of the year in which the revenue pertaining to bad debts were offered to tax before the authorities below. We also note that the Central Board of Direct Taxes ('the CBDT') vide Circular No. 551 dated 23 January 1990 has provided that bad debt written off is allowed as deduction in the year in which it is written off as irrecoverable in the account.
Assessee would be entitled to deduction of the impugned dad debt written off during the year under consideration. Further, we note that the issue as to whether the assessee is required to justify the writing off the debts in the books of accounts as bad in the year has now been settled and decided in the case of TRF limited v. CIT [2010 (2) TMI 211 - SUPREME COURT] wherein it has been held that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable and the accounting entry for write off is sufficient to claim the deduction for bad debts - Claim of bad debt actually written off in the books of the assessee should be allowed as deduction and, therefore, we allow the appeal of the assessee.
Credit of TDS short granted - HELD THAT:- We are of the considered opinion that this factual issue needs to be verified by AO and if the credit of TDS has not been given to the assessee then it should be given in accordance to law.
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2020 (4) TMI 855 - ITAT MUMBAI
Rectification of mistake - mistake apparent on record - reliance placed by the Tribunal on the decision in the matter of Bovis Lend Lease (I) Pvt. Ltd. v. ITO [2009 (8) TMI 853 - ITAT BANGALORE] which was not cited or discussed by either the applicant or the respondent at any stage nor mentioned by the Hon’ble Members during the original hearing AND even when the appeal was re-fixed for clarifications by the Tribunal amounts to violation of principles of natural justice and therefore, suffers from patent mistakes apparent from record - HELD THAT:- There is merit in the submission of the Ld. counsel that the reliance placed by the Tribunal on the decision in the matter of Bovis Lend Lease (I) Pvt. Ltd. (supra), which was not cited or discussed by either the applicant or the respondent at any stage nor mentioned by the Hon’ble Members during the original hearing before the Tribunal or even when the appeal was re-fixed for clarifications by the Tribunal amounts to violation of principles of natural justice and therefore, the impugned order suffers from patent mistake apparent on record.
As per the ratio laid down by the Hon’ble Bombay High Court in Inventure Growth & Securities Ltd. v. ITAT [2010 (5) TMI 99 - BOMBAY HIGH COURT], the finding arrived at in the impugned order on the basis of the decision in Bovis Lend Lease (I) Pvt. Ltd. (supra) should have been brought to the notice of the concerned parties. Inadvertently, the Bench failed to bring to the notice of the parties the above decision. MAs are allowed.
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