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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter January 14, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Profit sharing agreement - assessee was obligated to divert the income at source by overriding title - No tax evasion - Additions deleted Levy of interest u/s 201(1A) - online payment of TDS on 7th - As per the OLTAS, the date of remittance is 8th / 9th - No interest liability Articles SCRUTINY AND ROVING ENQUIRY SHOULD BE AVOIDED INSTEAD RECONCILIATION OF FIGURES IN DOCUMENT CAN BE SOUGHT FOR MANY SORT OF DIFFERENCES. Difference between deposit and advance amount in GST News Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and combined for the month of December 2019 Notifications GST - States 03/GST-2 - dated 9-1-2020 - Haryana SGST Extend the last date for filing of FORM GSTR-3B for the month of November, 2019 by three days from 20.12.2019 till 23.12.2019 under the HGST Act, 2017 Order No. 9/2019–State Tax - dated 6-1-2020 - Maharashtra SGST Maharashtra Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019. Order No. 10/2019–State Tax - dated 6-1-2020 - Maharashtra SGST Maharashtra Goods and Services Tax (Tenth Removal of Difficulties) Order, 2019 27/2019–State Tax (Rate) - dated 6-1-2020 - Maharashtra SGST Seeks to further amend notification No. 01/2017-State Tax (Rate), to change the rate of GST on goods as per recommendations of the GST Council in its 38th Meeting 74/2019-State Tax - dated 2-1-2020 - Maharashtra SGST Seeks to waive late fees for non- filing of FORM GSTR-1 from July, 2017 to November, 2019. 29/2019—State Tax (Rate) - dated 2-1-2020 - Maharashtra SGST To amend notification No. 13/ 2017- State Tax (Rate) so as to notify certain services under reverse charge mechanism (RCM) as recommended by GST Council in its 38th meeting held on 18.12.2019. 28/2019—State Tax (Rate) - dated 2-1-2020 - Maharashtra SGST To amend notification No. 12/ 2017- State Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019 08/2019—State Tax - dated 2-1-2020 - Maharashtra SGST Maharashtra Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019 73/2019—State Tax - dated 26-12-2019 - Maharashtra SGST Seeks to extend the last date for filing of FORM GSTR-3B for the month of November, 2019 by three days from 20.12.2019 till 23.12.2019. 29/2019-State Tax (Rate) - dated 7-1-2020 - West Bengal SGST Amendment in Notification No. 1137-F.T., dated the 28th June, 2017 28/2019-State Tax (Rate) - dated 7-1-2020 - West Bengal SGST Amendment in Notification No. 1136-F.T., dated the 28th June, 2017 02/2020-State Tax - dated 7-1-2020 - West Bengal SGST West Bengal Goods and Services Tax (Amendment) Rules, 2020 27/2019-State Tax (Rate) - dated 3-1-2020 - West Bengal SGST Amendment in Notification No. 1125-F.T., dated the 28th June, 2017 SEBI SEBI/LAD-NRO/GN/2020-02 - dated 10-1-2020 - SEBI Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2020 SEZ S.O. 156(E) - dated 8-1-2020 - SEZ Central Government notifies an additional area of 2.60 hectares, thereby making the total area of the Special Economic Zone as 31.99 hectares at 371/2, Kadayam Perumpathu Village, Near Petrol Bunk, Mathapuram, Ambasamudram Taluk, Tirunelveli District, in the State of Tamil Nadu Highlights / Catch Notes GST Principles of natural justice - adjudication completed before scheduled date of hearing - the case on hand is one of violation of sub-clause 4 of Section 129 of the GST Act, 2017 Visit to Get Source Attachment of Bank Accounts - The period of one year has already come to an end - while granting appropriate relief to the writ applicant, we would also ensure that the interest of the State is protected - This writ application is disposed off with a direction that the writ applicant shall maintain, at all time, a stock worth minimum sum of ₹ 4 Crore till the final disposal of the adjudication proceedings arising out of the show-cause notice Visit to Get Source Income Tax TP adjustments in relation to support services in relation to External Commercial Borrowings (ECBs). - The said receipt of fee / commission income has been accepted to be at arm’s length. Hence, there is no question of further fee that is required for the assessee in respect of continuing ECBs. - No additions. Visit to Get Source Transfer pricing adjustment - Correspondent Banking Activities - The main business transactions have been accepted to be at arm’s length and hence, the ld. TPO cannot separately treat the incidental benefit as a separate transaction unless it is shown that they are separate from the main business activities. - No transfer pricing adjustment on account of correspondent banking activity is warranted in the instant case Visit to Get Source Withdrawal of exemption granted u/s 10(23C)(vi) - An activity therefore could be genuine even though the same may not be in accordance with the stated objects. - Therefore, merely because an activity is not in accordance with the stated objects, it will not result in such activity to be classified as nongenuine. Visit to Get Source Withdrawal of exemption granted u/s 10(23C)(vi) - where the ld. CIT(E) has delegated his powers to any other authority to issue show cause notice and it is based on the satisfaction of that other authority and not of ld. CIT(E), it won’t satisfy the mandatory condition - But, in this case, condition of satisfaction of CIT(E) satisfied. Visit to Get Source Estimation of profit on undisclosed turnover - Addition @50% and granting relief @50% - assessment u/s 153A after search and seizure proceedings - Reliance of the statements u/s 132(4) of the assessee and third parties - retracted statements - Revenue failed to prove its case - entire additions deleted. Visit to Get Source Depreciation on residential property - AO directed to allow depreciation as claimed by the assessee on residential premises, but verify the fact with regard to deduction claimed u/s 24(a) - In case, the assessee claimed deduction u/s 24(a), then the same needs to be disallowed. Visit to Get Source Tax avoidance, Tax evasion or Tax planning - when there are material evidences to substantiate that the shares were issued to foreign investors, and the conversion of the share was in accordance with the terms of issue of the preference shares appropriately justified with the fair valuation, there is no case treating such an issue/conversion as a means of tax avoidance. Visit to Get Source Levy of interest u/s 201(1A) - online payment of TDS on 7th of the following month - In the online Tax Accounting System (OLTAS), the date of remittance was shown as 8th / 9th of the succeeding month. - the levy of interest u/s 201(1A) to the facts and circumstances of the present case cannot be justified. Visit to Get Source The Revenue’s emphasis for treating the assessee’s section 153A return as belated is without any merit since the same was very much treated as a valid one as per the assessment order and more so, in view of the fact that the Assessing Officer made other disallowance/additions on merits as well Visit to Get Source Profit sharing agreement - Diversion of income by overriding title or mere application of income - the assessee has been obligated by virtue of the agreement to divert the income at source and also for the contributions made by the holding company - the revenue sharing agreement entered with the holding company by the assessee is diversion of income by overriding title. - Additions deleted. Visit to Get Source Disallowance on account of salaries paid to the relatives - Addition u/s 40A(2)(a) - The A.O. did not doubt the salary paid to the employees which is paid through banking channel and the employees have shown the same salary in their return of income, on which, TDS also deducted - No additions. Visit to Get Source Revision u/s 263 - reassessment u/s 147 - AO was satisfied the explanation of the assessee with regard to Accommodation entries. - Reopening of the assessment in this case is invalid, bad in law and therefore, such re-assessment proceedings could not be reopened u/s 263 Visit to Get Source Disallowance u/s 43B - “Current Liabilities‟ shown towards advertisement tax payable to M.P. State Government as not paid till the date of audit - when the assessee did not debit the amount to Profit and Loss Account as an expenditure nor had the assessee claimed any deduction in respect of the amount, the question of disallowing u/s 43B of the Act does not arise. Visit to Get Source Deduction u/s 80IA(4) - whether activity of construction of road signages and foot over bridges amount to development of infrastructure facility as stipulated in section 80IA(4)? - Held NO Visit to Get Source Customs Mis-declaration of imported goods - ‘Aluminium Alloy Ingots’ or ‘Aluminium Scrap Throb’ - the goods stands described in the various import documents as “Aluminium Scrap ‘Throb’” and there is no evidence to rebut the said description given by the exporter. Visit to Get Source Once the goods are offered for redemption, these cease to be vested with the Central Government and the imposition of conditions, which precludes re-export, is not sanctioned by law. Visit to Get Source Requirement of Registration under Rules 3 and 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether the requirements are procedural in nature or not - By holding that the Rules of 1996 are only procedural or directory in nature, the learned Tribunal has frustrated the very purpose of Rules 3 and 4 in question by holding that the Assessee is entitled to the exemption for import made on 28.6.2003. Visit to Get Source Jurisdiction - power of DRI to draw samples - In the present case, after the release of imported goods approximately by April 2016 from the custom area, there was no power with the authorities, much less under Section 144 of the Act, to draw samples at a subsequent stage i.e. on 11.08.2016 from the factory premises. Visit to Get Source Extension of time for adjudication of SCN - In the absence of any extension of time after expiry of one year w.e.f. 28.03.2018 for adjudication on the Show Cause Notice dated 07.02.2014 (P-6), either under Section 28 Sub Section (9) or 9(A) of the 1962 Act, we hold that the impugned Show Cause Notice has lapsed. Visit to Get Source Jurisdiction - Advance Authorization - It is an admitted fact that the Advance Autorization Licence of the petitioners is still valid and no action is taken by the DGFT for breach of condition thereof. - When the Custom Department has exercised power in excess of jurisdiction, than, this Court can exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India. - The order quashed. Visit to Get Source Indian Laws Dishonor of Cheque - cheque was issued in discharge of any debt or liability of the company or not - Every award of the Lok Adalat is deemed to be decree of a civil court and executable as a legally enforceable debt - . The dishonour of the cheque gave rise to a cause of action u/s 138 of the Negotiable Instruments Act. Visit to Get Source Service Tax Levy of service tax - commission earned by the Managing Director of the appellant company, apart from his fixed salary, is in lieu of services provided by him for promotion of the sales in the market - payment of TDS under the head ‘salary’ - Matter restored for fresh consideration. Visit to Get Source Franchise service or not - appellant has entered into agreements with various independent bottlers who possesses the necessary licenses for manufacturing of alcoholic liquors - the appellant being brand owner and earned the profit/surplus, the same being in nature of business profit and the same is not chargeable to service tax - Benefit of circular, even if withdrawn, extended. Visit to Get Source Refund of unutilized CENVAT Credit - business of software trading - Export of services - place of provisions rules - intermediary services - arranging and facilitating procuring main services and transmitting the same to their overseas customers - Rule 9(c) would not be applicable as the respondent is not an intermediary - Refund allowed. Visit to Get Source Nature of activity - sale or service - supply of packed Antivirus Software (Quick Heal) to the end user by charging license fee - Information Technology services - Merely because “Quick Heal” retains title and ownership of the software does not mean that it interferes with the right of the licensee to use the software. - No service tax liability. Visit to Get Source Refund claim - amount deposited under a mistake of law - Period of limitation - When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not “Service Tax” or “Excise duty” and Section 11B of the Act has no application in such cases. Visit to Get Source Central Excise CENVAT Credit - HDPE/PP Bags used for packing of their final product, i.e. cement, destroyed in the course of packing - appellants cannot be asked to reverse the credit taken on the inputs which they have put to use for the intended purpose but which have become torn and non-useable in the course of manufacture/use as packing material. Visit to Get Source VAT Whether the State Government can levy the amount more than the actual cost incurred upon the excise staff deployed in distilleries / compounding and blending plants? - no extra amount can be levied from the companies, than the actual cost incurred by the State Government on deployment of the excise staff. - Similarly the fees leviable under Rule 36-A of the aforesaid Rules shall apply only to the compounding and blending plants of the foreign liquor. Visit to Get Source Rejection of Input tax credit claim - seller did not file the return - there being no mechanism under the JVAT Act, by which, the petitioner could compel the seller also to discharge their duty, it was not within the competency of the petitioner to compel the selling dealer to file the return within the stipulated time, and deposit the tax collected from the petitioner in the Government Treasury - ITC allowed - Amount realized by way of garnishee order, be refunded to the petitioner Visit to Get Source Re-opening of concluded Assessment - assessments having been completed pursuant to order passed by Special Tribunal and tax at rate of 10% was also collected, Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification. Visit to Get Source Withholding of refund - Validity of SCN - Mere pendency of the revision proceedings cannot be a justification for withholding the refund since that is not a ground for withholding the same under Section 38 and 39 of the DVAT Act. Visit to Get Source Case Laws: GST 2020 (1) TMI 467 Attachment of Bank Accounts - time limitation - section 83 of the Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- The plain reading of the order passed by a Coordinate Bench of this Court dated 17th January, 2019 would indicate that the attachment of the bank accounts was ordered to be released subject to the writ applicant maintaining an amount of ₹ 4 Crore in its Account No.117013011046 with the Dena Bank, Ahmedabad. It has been almost one year since the order came to be passed by the Coordinate Bench, granting interim relief in favour of the writ applicant. Even, otherwise, the life of an order of provisional attachment under Section 83 of the Act is one year. This period of one year has already come to an end on 27th December, 2019. No fresh order of any provisional attachment of the bank accounts has been passed, more particularly, in view of the interim order passed by the Coordinate Bench dated 17th January, 2019. Keeping in mind the time period that has elapsed, the interim order passed by the Coordinate Bench and the fact that the life of the order of the provisional attachment has come to an end, it will be an exercise in futility now to adjudicate this writ application on merits. We would like to dispose of this writ application balancing the equities. In other words, while granting appropriate relief to the writ applicant, we would also ensure that the interest of the State is protected - It is not even necessary now to quash the impugned order of the provisional attachment passed under Section 83 of the Act as the validity period has come to an end. This writ application is disposed off with a direction that the writ applicant shall maintain, at all time, a stock worth minimum sum of ₹ 4 Crore till the final disposal of the adjudication proceedings arising out of the show-cause notice dated 21st December, 2018 and 26th December, 2018 respectively. 2020 (1) TMI 466 Principles of natural justice - adjudication completed before scheduled date of hearing - GST liability - stock transfer - It is the case of the writ applicant that this being an intra state branch transfer (in the nature of transfer of goods from one Unit of a registered person to another), there was no obligation on the writ applicant to discharge any GST liability. HELD THAT:- This is a case of gross violation of the principles of natural justice. When the writ-applicant was asked to remain present on 08.07.2019 for the purpose of personal hearing, we fail to understand how the adjudication could have been concluded and an order could have been passed on 02.07.2019 i.e. before the scheduled date of hearing. This is suggestive of the fact that the reply of the writ-applicant in writing dated 08.07.2019 was also not taken into consideration. We are only concerned with the manner in which the respondent no.2 has proceeded to pass the final order under Section 129(3) of the Act - There is no doubt in our mind that the writ-applicant was not given any opportunity of hearing before concluding the proceedings for the purpose of Section 129(3) of the Act. To put it in another words, the case on hand is one of violation of sub-clause 4 of Section 129 of the Act, 2017. It provides that no tax, interest or penalty shall be determined under sub-section 3 without giving a person concerned an opportunity of being heard. The opportunity which the statute is talking about has to be meaningful opportunity and not just an eye wash. Matter remitted to the respondent no.2 for fresh consideration of the entire issue after giving appropriate opportunity of hearing to the writ-applicant - application allowed by way of remand. Income Tax 2020 (1) TMI 465 Allowability of Foreign exchange fluctuation loss u/s 37 - difference between amount given by it as loan to its subsidiary in the USA and the amount realized due to fluctuation is claimed as exchange loss - non conducting any enquiry - HELD THAT:- SLP dismissed. 2020 (1) TMI 464 Depreciation on electronic meters/energy meters - entitled to high depreciation at the rate of 80% or 60% - HELD THAT:- What percentage of the meters are energy saving devices, being meters for measures of heat losses, furnace oil flow, steam flow, electric energy and power factor meters was not gone into by the AO in terms of the remand order [ 2015 (11) TMI 927 - ITAT DELHI] and therefore the Tribunal should have ensured that the AO undertakes the said exercise and also determine whether the bus bars form an integral/inextricable part of the meters. The respondent submits that the issue that the electronic meters/energy meters, which are energy saving devices, are entitled to high depreciation at the rate of 80% stand included by the Tribunal, and as well as, by this Court and therefore the AO cannot be permitted to re-open the said issue. We agree with the submission of the learned counsel for the respondent. However, we also find that the Tribunal stopped short of redirecting the AO to deal with the real issues, on which the remand was made vide order [ 2015 (11) TMI 927 - ITAT DELHI]. Thus, those issues remain undetermined till date. In our view, the Tribunal should have ensured that the outstanding issues, in terms of the remand order, attain finality one way or another. We, therefore, answer the question in favour of the Revenue and remand back the matter to AO with a direction to strictly comply with the order of remand dated 05.10.2015 passed by the Tribunal which attained finality with the dismissal preferred by the appellant. 2020 (1) TMI 463 Deduction u/s 80IA(4) - claim denied on the ground that, assessee was not engaged in development of any infrastructure facility as laid down in section 80IA(4) without appreciating the correct facts of the case - whether activity of construction of road signages and foot over bridges did not amount to development of infrastructure facility as stipulated in section 80IA(4)? - HELD THAT:- Issue in the present appeal is identical to the one already adjudicated by Co-ordinate Bench of the Tribunal in assessee s own case for assessment year 2010-11 [ 2017 (10) TMI 1506 - ITAT PUNE] . The assessee has not placed on record any material to show any distinguishing features in assessment year under appeal. Therefore, we find no reason to take a different view. Following the order of Co-ordinate Bench, we hold that the assessee is not eligible for claiming deduction u/s. 80IA(4) in respect of construction of foot-over bridges and installation of road signages as they do not fall within the ambit of infrastructure facility within the meaning of Section 80IA (4) of the Act. Accordingly, appeal of the assessee is dismissed being devoid of any merit. Disallowance u/s 43B - Current Liabilities‟ shown towards advertisement tax payable to M.P. State Government as not paid till the date of audit - It is assessee‟s contention that the assessee has not claimed any deduction with respect to advertisement tax and has not debited any amount of expenditure in the Profit and Loss Account - HELD THAT:- We find that the Hon‟ble Delhi High Court in the case of CIT Vs. Noble and Hewitt (I) (P) Ltd. [ 2007 (9) TMI 238 - DELHI HIGH COURT] has held that when the assessee did not debit the amount to Profit and Loss Account as an expenditure nor had the assessee claimed any deduction in respect of the amount, the question of disallowing u/s 43B of the Act does not arise. Before us, the Revenue has not placed any contrary binding decision in its support nor has placed any material on record to demonstrate as to why the decision of Hon‟ble Delhi High Court in the case of CIT Vs. Noble and Hewitt (I) (P) Ltd. (supra) would not be applicable to the present facts - no disallowance was warranted u/s 43B of the Act and we thus, direct the deletion of disallowance. 2020 (1) TMI 462 Additions u/s 68 and u/s 41(1) - unexplained credit - receipt of refundable security deposit from business agents - none was present from the assessee s side - Ex-parte order - Held that:- After perusal of the materials on record, including the order of the AO and the aforesaid impugned order dated 08.08.2016 of the Ld. CIT(A), we find that the Ld. CIT(A) has passed speaking order on merits. During appellate proceedings in Income Tax Appellate Tribunal ( ITAT , for short) no material has been brought for our consideration to persuade us to take a view different from the view taken by the Ld. CIT(A) in the impugned order on merit. After hearing the Ld. Sr. DR and after perusal of materials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order of Ld. CIT(A), and accordingly, this appeal is dismissed. Assessee will be at liberty to approach ITAT for restoration of the appeal in accordance with Proviso to Rule 24 of Income Tax (Appellate Tribunal), Rules, 1963. If the assessee does approach ITAT for restoration of the appeals in ITAT, the matter will be considered in accordance with law having regard to the facts and circumstances. 2020 (1) TMI 461 Withdrawal of exemption granted u/s 10(23C)(vi) - thought process and application of mind by the ld. CIT(E) - delegation of power - educational institution - separate and distinct classes - genuiness of activity - Assessee is a self-regulated autonomous statutory body established by an Act of State Legislature, as a society - expenses incurred for hospital building or creating healthcare facility for staff and students - Held that:- The ratio decidendi of the decision [ 2017 (12) TMI 1475 - ITAT JAIPUR] rendered by the Coordinate Bench is that the 13th proviso to section 10(23C)(vi) confers the power/ jurisdiction to withdraw the approval to the prescribed authority i.e, ld. CIT(E) and therefore, the satisfaction of the ld CIT(E) is a must before issuing the show cause notice for the proposed action of the withdrawal of the approval granted u/s 10(23C)(vi) of the Act. Therefore, what is material and mandatory condition is the satisfaction of the ld CIT(E) and no one else. Further, the language and tenor of the show cause notice must exhibit the thought process and application of mind by the ld. CIT(E) and thus an expression of the satisfaction of ld. CIT(E) even though the same may be signed by the DCIT (Hqr.) or any other subordinate authority. However, where the ld. CIT(E) has delegated his powers to any other authority to issue show cause notice and it is based on the satisfaction of that other authority and not of ld. CIT(E), it won t satisfy the mandatory condition. The language and tenor of the show cause notice do clearly exhibit the thought process and application of mind by the ld. CIT(E) with inputs from the ITO (Hqr.) and the Assessing officer, and thus an expression of his satisfaction of the proposed action to withdraw the exemption so granted to the assessee university. - The legal proposition so emerging from the said decision in fact supports the case of the Revenue. Genuineness of activities of the institution - Held that:- Similarly, we also note that the cancellation of registration granted to any educational institution under Section 12AA(3) of the Act can happen in two scenarios; one where the activities of the educational institution are not genuine and secondly, where the activities of the educational institution are not being carried out in accordance with the objects for which the educational institution has been established. The legislature has thus envisaged a distinction between an activity not being genuine and an activity which is not in accordance with the stated objects. An activity therefore could be genuine even though the same may not be in accordance with the stated objects. - Therefore, merely because an activity is not in accordance with the stated objects, it will not result in such activity to be classified as nongenuine. On the question of whether the activities of the university of conducting these courses are genuine or not, we do not have to travel too far, as we noticed from perusal of record and pointed out during the course of hearing to both the parties, as the answer is given by the Revenue itself where it has subsequently granted approval to the assessee university as a charitable institution u/s 12AA. Though these are two independent provisions, there are similarities in the sense that at the time of grant of registration/approval, the genuineness of the activities are examined by the ld CIT(E) in both the cases and similarly, at the time of withdrawal, the test of non-genuineness is applied in both the cases, as we have noted earlier. In the instant case, we wonder how the University can be said to be carrying on non-genuine activities by conducting such courses resulting in withdrawal of exemption under section 10(23C)(vi) and conducting the same courses as genuine activities resulting in grant of approval under section 12AA of the Act within a span of less than a year when the same courses are being conducted during this period. It is a medical research and teaching hospital with the sole object of providing teaching and training to the students in medical courses such as Nursing, Paramedical etc. and also taking care of general healthcare and wellness of the students and staff of the assessee University. CIT(E) directed to restore the exemption approval under section 10(23C)(vi) - Decided in favor of assessee. 2020 (1) TMI 460 Revision u/s 263 - reassessment u/s 147 - AO was satisfied the explanation of the assessee with regard to Accommodation entries. - Assessee submitted that, assessment was reopened based on mere Investigation Wing appraisal report - Revenue submitted that, assessment erroneous as well as prejudicial to the interests of the Revenue because A.O. has not examined the seized material found during the course of search. Held that:- it is clear that the Addl. CIT and Ld. Pr. CIT while granting approval for reopening of the assessment under section 147/148 of the I.T. Act merely stated Yes , which would show that they have not applied their independent mind and merely accorded sanction without going through any material on record. The issue is thus covered against the Revenue by the aforecited decisions in which even on more facts the approval was not found valid. Reopening of the assessment in this case is invalid, bad in law and therefore, such re-assessment proceedings could not be reopened under section 263 of the I.T. Act, 1961. It may also be briefly noted that the A.O. in the reasons recorded in the assessment order has mentioned that assessee has received accommodation entries in assessment year under appeal from five parties in a sum of ₹ 70 lakhs and after reopening of the assessment, A.O. called for the details and documents from the assessee and was satisfied with the explanation of assessee, therefore, the of proceedings under section 263 of the I.T. Act by the Ld. Pr. CIT could not have substituted the view taken by the A.O. Revision order quashed and set aside. 2020 (1) TMI 459 Disallowance on account of salaries paid to the relatives - Addition u/s 40A(2)(a) - HELD THAT:- . The assessee has explained before the authorities below, the circumstances of which payments have been made to the relatives and also expenditure as to what services they have rendered for the assessee company along with their qualification. In earlier year, similar salary have been allowed deduction by the Revenue Department. There is nothing unreasonable in this regard. In any case, even for applying the provisions of Section 40A(2), it is for the A.O. to make-out a case that the expenditure incurred is excessive or unreasonable having regard to the fair market value of such services. However, no efforts have been made by the A.O. in this regard. Therefore, there were no justifications for the A.O. to disallow the salary payment to the employees who are relatives of the Director. The Hon ble Supreme Court in the case of Upper India Publishing House Pvt. Ltd. [ 1978 (12) TMI 2 - SC ORDER] held that before applying the provisions of Section 40A(2), A.O. should have proved expenditure is excessive or unreasonable - there was no justification to disallow salary. The A.O. did not doubt the salary paid to the employees which is paid through banking channel and the employees have shown the same salary in their return of income, on which, TDS also deducted. - Decided against revenue Disallowance of excess remuneration paid to the Directors - A.O. disallowed substantial portion of the payment on the belief that for the immediately preceding A.Y. 2009-2010 payment of only ₹ 2 lakhs had been made to Shri Kushal Rana on this account and there was abnormal increase in Director s remuneration over the year - as per assessee A.O. disallowed substantial portion of the payment on the belief that for the immediately preceding A.Y. 2009-2010 payment of only ₹ 2 lakhs had been made to Shri Kushal Rana on this account and there was abnormal increase in Director s remuneration over the year - HELD THAT:- We do not find any justification to interfere with the Order of the Ld. CIT(A) in deleting the addition. The Ld. D.R. merely relied upon the Order of the A.O. but could not point-out any infirmity in his order in deleting the addition. Since in preceding assessment year same amount have been paid to the Director which have been allowed by the Revenue Department, therefore, Ld. CIT(A) following the Order for earlier year, correctly deleted the addition. Ground No.2 of the appeal of Revenue is accordingly dismissed. Gain on sale of land - nature of land sold - agricultural land or capital asset - Disallowance as claimed as exempt u/s 2(14) - A.O. made this addition rejecting the claim of assessee by treating profit on sale of Pooth Khurd village land to be exempt under section 2(14) being agricultural lands not falling in the definition of Capital Asset - HELD THAT:- Since the land in question is dealt by Delhi Land Reforms Act and nothing is brought on record of violation of the aforesaid provisions and the Competent Authority under the Delhi Land Reforms Act, Certified that the lands in question falls beyond 8 KM from the Municipal Limits, therefore, there is nothing wrong in the findings of the Ld CIT(A) in holding that land in question is agricultural land and amount earned on sale of the land to be capital receipt. The decisions relied upon by the Learned D.R. would not support the case of the Revenue. No infirmity in the order of the Learned CIT(A) in allowing the claim of assessee. We, therefore, do not find any merit in the departmental appeal on this ground and the same is dismissed accordingly. Deduction u/s 35D - Allowance of 1/5th of ROC fees of ₹ 6,50,000/- and balance in four years - HELD THAT: In assessment year under appeal the assessee company has increased its authorised share capital. The assessee paid ROC fees. The issue is, therefore, covered by the Judgment of the Hon ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited and Brooke Bond India Limited (supra) against the assessee, in which it was held that fees paid to the Registrar of Companies for enhancement of capital is capital expenditure. In this view of the matter, we set aside the Order of the ld. CIT(A) and restore the Order of the AO as no deduction is permissible and Section 35D would not be applicable. Addition u/s 51 on account of treating the forfeiture of advance paid for acquisition of property as capital loss - HELD THAT:- Considering nature of business of assessee that assessee is engaged in the business of infrastructure, purchase, manufacturing, trading, import and export of construction material, mining extracts etc., we are of the view that the matter have not been appreciated by the authorities below in accordance with the Law. Since both the parties have suggested that the matter may be remanded to the file of AO, therefore, in the interest of justice, we set aside the Orders of the authorities below and restore this issue to the file of AO with a direction to re-decide this issue in accordance with Law, by giving reasonable, sufficient opportunity of being heard to the assessee. Disallowance of TDS default - HELD THAT:- We set aside the Orders of the authorities below and restore this issue to the file of AO with a direction to verify the record and in case no expenses have been claimed by assessee in P L A/c, then, no addition could be made on account of non-deduction of TDS, otherwise, it would amount to double addition. The AO shall give reasonable, sufficient opportunity of being heard to the assessee. Deduction u/s 80G - failure to produce any proof, therefore, it was disallowed under section 37 - HELD THAT:- Learned Counsel for the Assessee merely relied upon the Order of the AO and has not produced any approval under section 80G of the I.T. Act of the Temple, whether the said Temple was authorised to collect donation? Further, as per Explanaion-5 to Section 80G of he I.T Act, no deduction shall be allowed under this Section of any donation unless such donation is of a sum of money. Therefore, claim of assessee could not be allowed. This ground of appeal of Assesse is dismissed. 2020 (1) TMI 458 Additions - High construction of cost of developments activities relating to construction activities of the CWG - Additions on the basis of budgeted estimates used in Percentage of Completion Method (POCM). - the addition has been made solely based on the Shunglu Committee Report. - Held that:- The object of the Shunglu Committee was to determine, if the purchase of 333 additional flats by DDA was according to the norms / rules and had not caused any loss to the exchequer. Its object was not to determine the cost or expenditure to the assessee, indeed, the assessee was never called to the proceedings of the Shunglu Committee, nor was any input / clarification taken from the assessee. It can also be find that another government agency, the Labour Commissioner, has accepted the cost of the assessee for the purpose of levy of labour cess on the CGV project. What is primarily required is to prove the inflation in the cost of construction is to determine, investigate and prove whether any expenditure claimed in the P L account or said to be incurred for construction are bogus or inflated. This inflation could be either on payment of sub-contractors or cost of materials. Nowhere, the method of accounting standard followed by the assessee has been disputed, in fact, no grounds could be brought out by the Assessing Officer to alter the percentage shown by the assessee except the document of estimated cost. The factor such as increase in the input cost, exit of the main contractor, change in the specification are not considered by the Assessing Officer. In the instant case, there has been no evidence of inflation of purchases, the Assessing Officer has not rejected the books of account, the accounts have been accepted but altered the profits based on the estimated project cost. This cannot be said to be legally tenable. - Additions deleted. Profit sharing agreement - Diversion of income by overriding title or mere application of income - Additions towards 25% of share of Consortium partner - The share of revenue to the holding company was declared in its return of income and assessed by the department accordingly. - Held that:- The assessee company was a Special Purpose Vehicle (SPV) created to execute CWG project as one of main conditions of CWG project was that it should be undertaken by an SPV. SPV could not undertake such a large project without financial support from either its shareholder or any external party. The assessee is under the obligation to part away with the source of income to the holding company and it was not its volition alone, to give away the revenue that could have been otherwise accrued to them. An agreement entered into by the holding company with the assessee for providing financial security cover and to part away 25% sales proceeds was clearly a case of division of source of income between the holding company and the assessee. The flats to be constructed, by the assessee company were the source of income and the holding company had created a lien over 25% for a quid pro quo thereof and therefore took away 25% shares from the sale proceeds. It is not a case that the entire sale proceeds of flats and therefore, the income there from would have accrued to the assessee and 25% thereof had been applied or given away by the assessee to the holding company. The assessee acts as a collector of revenue for the holding company of the receipt to the extent of 25% of the sale proceeds. The 25% belongs to the holding company by virtue of the contributions made and the agreement entered. If there is an obligation before an income accrues and the assessee is under compulsion to discharge his obligation, it would be a case of diversion by superior title but, where there is no compulsion and no pre-existing obligation, but it is assessee s choice to create an obligation on himself either before income received, accrues of arisen or thereafter, it would only be a case of application of income. A compulsion at source imposed by a third party is necessary to create a superior title. Just because diverted income is collected by the assessee himself for and on behalf of the beneficiary; it cannot be inferred that it was only an application and not diversion. In the instant case, the assessee has been obligated by virtue of the agreement to divert the income at source and also for the contributions made by the holding company. Thus, we hold that the revenue sharing agreement entered with the holding company by the assessee is diversion of income by overriding title. - Additions deleted. Interest income - Netting off - interest has been netted off against project cost - Held that:- Having considered the facts of the case, Sections 56, 57 and the provisions relating to Section 28, Section 36 37, and the provisions of Section 71 of the Income Tax Act, 1961 and the judgments on the issue, we hereby hold that in the instant case where the assessee is taxed at the maximum marginal rate, the addition would be revenue neutral. - No additions. Decided in favor of assessee and against the revenue. 2020 (1) TMI 457 Amortization u/s 35D(2)(c)(iv) regarding its IPO - AO denied claim since the assessee stood incorporated way back on 25.08.1995 and it had been carrying out its business activities, it could not be said that this expenditure was prior to commencement of the business. And that this expenditure pertained to IPO only and therefore, it carried imprint of capital expenditure as well - CIT(A) has deleted the impugned disallowance - HELD THAT:- There can hardly be any dispute that this statutory provision prescribes amortisation of capital expenditure relating to specified items only u/s 35D which have been incurred; before the commencement of business or after the commencement of his business, in connection with the extension of its undertaking or in connection with his setting up a new industrial unit provided in sub-section 2(i) and (ii) of section 35D; respectively. We find that there is no rebuttal coming from the Revenue side about the purpose of assessee s capital raised as meant for investment in capital equipments, working capital requirement, general corporate purposes followed by issue expenses only. This tribunal s recent decision in ACIT vs. West Gujarat Expressway Ltd. [ 2015 (5) TMI 305 - ITAT MUMBAI] allows similar instance of expenses of authorized share capital as amortizable falling under extension of the undertaking only. Thus the assessee s case comes u/s 35D(2)(ii) since in connection with extension of its undertaking only as evident from assessee s foregoing factual details. Section 80IA deduction and its exemption u/s 115JB MAT computation - treat the former assessment year 2010-11 as the lead assessment year - filing of belated revised return - HELD THAT:- The impugned section 80IA deduction claim on merits, is already covered by the tribunal common order (supra) in assessment years 2005-06 to 2009-10 that it is a developer having undertaken business risk in similar infrastructural projects. Revenue s pleadings in the instant appeal nowhere pinpointed any distinction in law and on facts in all these assessment years. It is further noted that the assessee has been deployed its fixed assets and also paid retention money to the payers concerned. All this sufficiently indicates that the assessee s payers nowhere undertook any risk in the corresponding projects. Filing of belated revised return - we find that hon ble apex court s judgment in NTPC [ 1996 (12) TMI 7 - SUPREME COURT] settled the law long back that if the assessee is a legally entitled for a deduction claim which is not taxable and the corresponding claim can also be allowed to be raised for the first time even in section 254 proceedings. It has also come on record that the assessee had very well explained the reasons of having not raised the impugned scheme due to the corresponding legislative amendments in section 80IA followed by CBDT s explanatory memorandums. This tribunal in ITO vs. S. Venkataiah [ 2012 (6) TMI 40 - ITAT HYDERABAD] also holds that an assessee s legally allowable claim which could not be raised owing to circumstances beyond its control and pressed later on by way of belated return, could not be declined on account of mere technicality The legislature has nowhere employed such a restrictive expression in the new scheme of search assessment in section 153A to section 153C applicable w.e.f. 01.06.03. More particularly u/s 153A(1)(a) reads that the provisions of this Act shall so far as the case may be applied accordingly as if such return was furnished u/s 139 meaning that a return filed u/s 153A is treated as that filed u/s 139 of the Act only. Same analogy therefore applies to a revised return covered under the said general scheme of the Act only. We therefore hold that the Revenue s emphasis seeking to delete assessee s return itself as an invalid one does not deserve to be accepted. CIT-DR s further argument seeking to invoke section 80AC of the Act that no such deduction shall be allowed to him unless he furnishes the return of his income for such assessment order on or before the due date specified under sub-section (1) of section 139 also fails to evolve our concurrence since the assessee admittedly filed his return u/s 139(1) as on 13.10.10 only. The Revenue s emphasis for treating the assessee s section 153A return as belated is without any merit since the same was very much treated as a valid one as per the assessment order and more so, in view of the fact that the Assessing Officer made other disallowance/additions on merits as well We lastly notice more a perusal of assessee s corresponding development agreements running to pages 1 to 164 in paper book dated 27.10.09 and other similar records comprising 1-854 pages that it had very well undertaken business risks by raising capital deployment of fixed assets for carrying out the necessary infrastructural development and complied with retention money stipulations as well(supra). The assessee has also been treated as a developer in earlier assessment years. We therefore conclude that the CIT(A) has rightly accepted the assessee s revised claim to allow its section 80IA deduction There is hardly any dispute that the impugned section 115JB MAT provision is in the nature of a non-obstante clause since containing the clinching statutory expression notwithstanding anything contained in any provision of the Act. There is no exception thereto in the relevant deduction provision u/s 80IA. We thus apply the legal latin maxim generalia specialibus non-derogant , i.e the general provision must yield to the special provision and hold in light of the coordinate bench s detailed discussion that the assessee s grievance seeking MAT exemption regarding its section 80IA deduction claim of ₹ 23,90,63,499/- does not carry any merit. The same stands rejected therefore. Section 80IA deduction claim in normal provision followed by its exemption from section 115JB MAT computation - HELD THAT:- This assessee s paper books indicate this claim was neither declined in assessment order dated 22.03.2013 nor in the CIT(A) s order. Rather no such ground was raised as per Form 35. The fact also remains that the assessee has placed on record its identical details of having carried out infrastructural development. We therefore keep in mind the clinching facts of the assessee s corresponding details in the paper book and deem it appropriate to restore the instant issue forming subject matter of second and third substantive grounds back to the Assessing Officer for adjudication as per law in light of our detailed discussion in preceding paragraphs in assessment year 2010- 11. We make it clear that the assessee would not be entitled for section 115JB MAT exemption going by our findings in lead assessment year. Entitled for exemption of income derived from joint venture - section 251(1)(a) power of CIT(A) to set aside the issue back to the Assessing Officer - HELD THAT:- We find from the former assessment year s assessment order dated 22.03.13 para 4.3 that there is no other reasoning whatsoever in the Assessing Officer s opinion to decline the impugned exemption. The CIT(A) s order under challenge on the other hand holds that the assessee had filed all the relevant documents to the Assessing Officer which had nowhere been considered. We therefore observe that although the Revenue has argued on the basis of section 251(1)(a) that the power of CIT(A) to set aside the issue back to the Assessing Officer stands omitted w.e.f. 01.06.01, the impugned argument direction are against the law. The same deserves to be rejected since the assessing authority has been directed to go by the actual and than on estimation basis figures only. We thus decline the Revenue s foregoing arguments. Suffice to say, the Assessing Officer directed to finalise his consequential factual verification as per law. Section 115JB exemption claim qua its joint ventures - we hold that the Assessing Officer shall take into account all factual as well as legal aspects (section 115JB Explanation 1(fa) not applicable in the impugned assessment year 2010-11 2011-12) in his consequential computation. Allow the assessee s education cess(es) in both assessment years in both assessment years as allowable deduction in law. MAT exemption of the impugned education cess - HELD THAT:- We find that the section 115JB Explanation 2(iv) and (v) makes it clear that the secondary and higher education cess(es) on income tax have been included in Explanation (1)(a) thereof. We therefore decline the assessee s latter grievance on the instant issue. Section 115JB MAT adjustment exemption regarding its retention money - HELD THAT:- After giving our thoughtful consideration to the rival contentions in favour and against the impugned relief, we notice that this issue is no more res integra since the tribunal s order in DCIT vs. M/s Mcnally Bharat Engineering Ltd. [ 2020 (1) TMI 203 - ITAT KOLKATA] holds that such a retention money cannot be regarded as income even for the purpose of computing section 115JB book profits. Learned coordinate bench holds that retention money does not partake character of income till the time the contractual obligation in issue are fully performed to the satisfaction of the payer/other parties concerned. We adopt the very reasoning mutatis mutandis and direct the Assessing Officer to grant the impugned section 115JB MAT exemption to the assessee regarding retention money amounts in issue. Its above substantive grounds are accepted. Section 153A proceedings are not liable to be invalid since initiated without any incriminating documents found during the course of search in question - HELD THAT:- The impugned assessment is indeed based on incriminating material found during search have gone unrebutted from the assessee s side. We therefore decline its first substantive ground. 2020 (1) TMI 456 Interest u/s 234B and 234C - assessee has already made payment for this year which is about 50% of the disputed tax demand excluding interest - HELD THAT:- We feel it proper to grant extension of stay already granted to the assessee. We order accordingly. The stay is extended for a further period of 4 months from the date of this order or till the disposal of these appeals whichever is earlier. The appeals for these two years are already fixed for hearing on 03.03.2020. We want to make it clear that the assessee should not seek any adjournment without justifiable reasons in the course of hearing of these appeals and if the assessee does so, then the stay granted. Stay Petitions filed by the assessee are allowed. 2020 (1) TMI 455 Disallowance u/s 14A - HELD THAT:- It is not in dispute that the assessee had not derived any exempt income during the year. Hence, in our considered opinion, the provisions of Sec. 14A of the Act cannot be made applicable. This issue is now very well settled by the decision of Hon'ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT] . Accordingly the ground No.1 raised by the revenue is dismissed. Tax avoidance, Tax evasion or Tax planning - Addition of share premium and share capital added u/s 56(1) - shares issued to foreign investors which were converted - HELD THAT:- When there are material evidences to substantiate that the shares were issued to foreign investors, and the conversion of the share was in accordance with the terms of issue of the preference shares appropriately justified with the fair valuation, there is no case treating such an issue/conversion as a means of tax avoidance. In the present case, we find that the assessee has converted/issued shares to the foreign investors at a premium. There is no question of any transfer or any assets or any income therefrom on which the transferor has the right to reassume power over the income or assets. In any case, the provisions of Sec. 61 to 63 of the Act is not applicable in the hands of the transferor and the assessee herein is the recipient of the funds from the foreign investor and accordingly it is only transferee. Hence, the provisions of Sec. 61 to 63 of the Act does not come into operation at all. The amounts received on issue of share capital including the premium is undoubtedly on capital account. Share premium have been made taxable by a legal fiction under Section 56(2)(viib) of the Act and the same is enumerated as Income in Section 2(24)(xvi) of the Act. However, what is bought into the ambit of income is the premium received from a resident in excess of the fair market value of the shares. In this case what is being sought to be taxed is capital not received from a non-resident i.e. premium allegedly not received on application of ALP. Therefore, absent express legislation, no amount received, accrued or arising on capital account transaction can be subjected to tax as Income. We find considerable substance in the Petitioner's case that neither the capital receipts received by the Petitioner on issue of equity shares to its holding company, a non-resident entity, nor the alleged short-fall between the so called fair market price of its equity shares and the issue price of the equity shares can be considered as income within the meaning of the expression as defined under the Act. We hold that there is absolutely no case for making any addition u/s 56(1) of the Act. Disallowance of interest u/s 36(1)(iii) in respect of interest free advances given to certain subsidiary companies - HELD THAT:- It is not in dispute that the monies were advanced by the assessee company to its subsidiary companies free of interest. We find that the Ld. A.O had disallowed the interest paid on borrowed funds u/s 36(1)(iii) of the Act on a proportionate basis of advancing of monies to its subsidiaries The aforesaid submissions made by the assessee were not controverted by the revenue before us. Hence, the interest free advances made to subsidiaries by the assessee were purely out of commercial expediency and once the commercial expediency is proved, then there cannot be any disallowance of interest u/s 36(1)(iii) of the Act. But we find that the Ld. CIT(A) despite the fact of commercial expediency being proved by the assessee, had recorded a categorical finding that the disallowance of interest need to be restricted only to ₹ 34,24,711/- based on the availability of own funds with the assessee company. Accordingly, the Ld. CIT(A) had restricted the disallowance of interest to ₹ 3424711, against which action, we are informed that assessee had not preferred an appeal before us. This is a case where no disallowance of interest need to be made in view of proving of commercial expediency beyond doubt but since the assessee has not preferred an appeal before us against the restriction of disallowance of interest to ₹ 34,24,711/- by the Ld. CIT(A), we do not deem it fit and appropriate to interfere in the said order of the Ld. CIT(A). - Decide against revenue 2020 (1) TMI 454 Estimation of profit on undisclosed turnover - Addition @50% and granting relief @50% - assessment u/s 153A after search and seizure proceedings - Reliance of the statements u/s 132(4) of the assessee and third parties - retracted statements - Held that:- a sworn statement, though binds the assessee, it cannot be the sole basis for making the assessment. It is open to the assessee to show the circumstances in which confessional statements were recorded and once the assessee proves that confessional statements were recorded under threat and coercion and retracts from the same, the confessional statements cannot be the sole basis for making assessments or for making any addition in the hands of the assessee. From the circular, Circular, it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. From the details of seized document, The Assessing Officer presumed that it represents the sale of wheat products. There is no basis for such assessment order. The Assessing Officer had not examined any of the parties mentioned therein and he presumed that Shri P.K. Kunjumoideen was acted on behalf of the assessee and he was selling the wheat products like maida, sooji, atta and bran. For this, the Assessing Officer relied on the sworn statement of Shri P.K. Kunjumoideen, Shri Premil Deep and Shri Sabarigireesan. Further, these statements have no evidentiary value in view of retraction made by these persons immediately the next day. Hence, what was left to rely on was the seized document cited supra. The seized document suggest that the assessee was engaged in the sale of wheat products from Tee Kay Rice Mills. The sole basis on which the Assessing Officer presumed that the assessee was selling the wheat products through Shri P.K. Kunjumoideen is collapsed. The estimation of production of wheat products and selling thereof have no basis and it is only a presumption without any basis. In our opinion, the entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence, the same can be overlooked. If there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. Even applying this principle to the present case, there was difficulty in rejecting the assessee s plea as opposed to the normal course of human conduct. The circumstances surrounding the case were not strong enough to justify the rejection of assessee s plea as untrue. Accordingly, we delete the additions made by the Assessing Officer towards undisclosed sales of wheat products for all the assessment years. Thus, the appeals of the assessee are allowed. 2020 (1) TMI 453 Bogus expenditure - AO did not find the explanation of the assessee as convincing and stated that the assessee has not furnished any documentary evidence on which reliance could be placed such as any copy of agreement signed between the parties or any such other document which has not been prepared by the assessee company on its own - CIT(A) observed that the two invoices in question do not represent expenses, but rather represent income and deleted the addition - HELD THAT:- Assessee admitted to have received the amounts covered by the invoices. There is no comment on the books of accounts of the assessee by the learned Assessing Officer, but according to the learned Assessing Officer there is no document which has not been prepared by the assessee company on its own in support of the contentions of the assessee. It is also an admitted fact that the party who paid the sums to the assessee have deducted TDS on such amounts as reflected in form AS-26. These receipts of the assessee, as observed by the Ld. CIT(A), are reflected in the books of accounts of the assessee. Finally, learned Assessing Officer was of the opinion that the bogus expenses booked and such bogus expenses were to be disallowed. On this premise learned Assessing Officer added the receipts of ₹ 2,61,56,545/-to the income of the assessee. It is, therefore, clear that the Assessing Officer is not sure whether he was adding the income or disallowing the expenses. It is not that the assessee claimed the expenses to the tune of ₹ 2,61,56,545/-which the learned Assessing Officer wanted to disallow. In view of the fact that the veracity of the agreement between M/s Vivek Pharmachem and the assessee needs to be verified by the learned Assessing Officer, as submitted by both the counsel, we are of the considered opinion that this is a fit matter to set aside the impugned order and to remand the issue to the file of the learned Assessing Officer for verification of the agreement and to reach a right conclusion - Appeal of the Revenue is allowed for statistical purpose. 2020 (1) TMI 452 Levy of interest u/s 201(1A) - online payment of TDS on 7th of the following month - In the o nline Tax Accounting System (OLTAS), the date of remittance was shown as 8th / 9th of the succeeding month . - allegation of delaying in remitting tax deducted at source to the credit of the Central Government - HELD THAT:- The collection of income-tax shall be regulated by the provisions of the Act. The circular issued by the CBDT, in exercise of their statutory power under section 119, would be binding on the income-tax authorities in preference to any other executive instruction issued by any other authorities. Therefore, it is very clear that even the Government has taken a decision with respect to the payment of the Government dues by cheque. The circular of Directorate of Service Tax clearly expresses the intention of the Government in treating the payments made by the individual assessee by cheque or bank draft. Central Government Account (Receipts and Payments) Rules, 1983 was framed by the executive authorities in exercise of their power under article 283(1) of the Constitution of India. Rule 20(1) of said Rules says that when the payment was made by cheque or draft, the payment shall be deemed to have been made on the date on which it was cleared and entered in the receipt scroll. Whereas under the Negotiable Instruments Act, 1881, as interpreted by the Supreme Court in the case of K. Saraswathy [ 1989 (5) TMI 318 - SUPREME COURT] , it is obvious that the date of payment relates back to the date of presentation of the cheque provided the cheque was honoured on its presentation. Therefore, there is an apparent conflict between the law enacted by the Parliament, namely, the Negotiable Instruments Act, 1881 on one hand and the Rule framed by executive authorities in exercise of their power under article 283(1) of the Constitution of India, on the other hand. Whenever there is a conflict between the rules framed by the executive authorities and the law enacted by the Parliament, it is obvious that the law enacted by the Parliament will prevail over the rules framed by the executive authorities. Therefore, the provisions of the Negotiable Instruments Act, 1881 as interpreted by the Apex Court in the case of K. Saraswathy (supra) would prevail over the Central Government Account (Receipts and Payments) Rules, 1983. Tribunal finally concluded that when the cheques were presented and deposited before the authorized banker within the due date for payment of advance tax and when the cheques are encashed and the amounts were realised subsequently the date of payment should be taken as date of presentation of the cheques and the Assessing Officer was directed to take the date of presentation of the cheques before the authorized banker for payment of advance tax as date of payment. The aforesaid decision will apply with much greater force in the present case as the payment in the present case is online and the credit to the Government s account is instant. The Central Government Account (Receipts and Payments) Rules, 1983 do not apply to payments online but are applicable to payments made by cheques and the date of payment when payments are made by Cheques. Even in such cases, the rule is that if the cheques are ultimately honored the date of handing over the cheque to the Government should be regarded as the date of payment. Therefore the aforesaid decision of ITAT Chennai Bench in the case of P L Haulwel Trailers Ltd. [ 2006 (1) TMI 213 - ITAT MADRAS-B] supports the plea of the assessee that the levy of interest under section 201(1A) of the Act to the facts and circumstances of the present case cannot be justified. We, therefore, direct that the order under section 201(1A) of the Act be cancelled. The appeals of the assessee are accordingly allowed. 2020 (1) TMI 451 Revision u/s 263 - Disallowance u/s 14A - HELD THAT:- Decision of Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] was passed on 16/06/17, whereas impugned order under 263 by CIT has been passed on 30/03/2017. On date, when order under 263 was passed by Ld. CIT, Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. (supra) was not available to the benefit of assessee. In the present scenario as decision is available, we cannot uphold order impugned as considering 14A disallowance while computing book profit is contrary to view adopted by Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. (supra). We place reliance upon decision of Hon ble Supreme Court in case of CIT vs.Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] wherein, it has been held that decision favourable to assessee should be followed. We therefore, hold order passed by Ld.CIT to be bad in law and the same is quashed and set aside. - Decided in favour of assessee. 2020 (1) TMI 450 Disallowance of deduction u/s. 54F in respect of capital gain - not admitting the claim of deduction made in respect of deposits made in the capital gains scheme account beyond the date specified in section 139(1) - HELD THAT:- Hon'ble Apex Court in SMT. TARULATA SHYAM AND OTHERS [ 1977 (4) TMI 3 - SUPREME COURT] has held that there is no scope for importing into the statue words which are not there whereas as per the facts of the present case different Hon'ble High Courts have time and again interpreted the provisions of section 54 of the Income Tax Act and in all those judgments it has been held that even if the sale consideration received on transfer of asset is deposited into the capital gain bank account before the due date of filing the return of income prescribed u/s.139(4) of the Act then the deduction u/s.54 of the Act cannot be denied. We are of the firm view that the judgment referred to by the ld.CIT(A) of Hon'ble Apex Court in the case of Smt. Tarulata Shyam is not applicable to the facts and circumstances of the case rather the judgment has cited above are clearly applicable to the facts and circumstances of the present case wherein it has been held that even if the sale consideration received on transfer of asset is deposited into the capital gain bank account before the extended date of filing the Return of Income u/s.139(4) of the Act, the deduction u/s.54F of the Act cannot be denied. Since from the facts of the present case the amounts has already been deposited by the assessee in the capital gain account with the bank before the due date for filing Return of Income u/s.139(4) of the Act, thus in this eventuality the deduction u/s.54F of the Act cannot be denied to the assessee and thus we allow this ground and set-aside the order of the ld.CIT(A) and direct the AO to give deduction to the assessee u/s.54F of the Act, accordingly effective ground of the assessee is allowed. 2020 (1) TMI 449 Penalty u/s 271(1)(c) - defective notice - disallowance of the claim of exemption u/s 10B - HELD THAT:- Order passed in section 143(3) of the Act does not specify whether the proceedings were to be initiated for either concealment of income or for furnishing inaccurate particulars or both. It reads that inaccurate particulars of income were furnished thereby concealing an income on account of wrong claim. Notice under section 274 read with section 271(1)( c ) of the Act, however, reads that the assessee had to defend itself for concealment of particulars of income or furnishing of inaccurate particulars thereof. It does not specify whether it was concealment of income or furnishing of inaccurate particulars thereof. Impugned penalty order, however, reads that penalty was levied for submitting inaccurate particulars of income. These facts indicate that there is discrepancy as to in respect of which charge the assessee was called upon to defend itself. For the AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. As a consequence of our findings above, we direct the Assessing Officer to delete the penalty in question. - Decided in favour of assessee. 2020 (1) TMI 448 N.P. Determination - assessee was into the business of selling of vegetables both from the dealers as well as farmers - Bifurcation of business categories - HELD THAT:- Assessee himself had contended before the AO that his trading activities are to be bifurcated into two categories i.e. selling vegetables on behalf of farmers and on behalf of dealers and retailers. CIT(A) seems to have mis-read the Note given by the assessee as he has recorded that the assessee has not stated that he has sold vegetables on behalf of farmers. The assessee in his Note has mentioned farmers who are also known as agriculturists. However, I also find that the assessee has failed to bifurcate the sales and also in estimating of profit from such sales. Therefore, no discrepancy in CIT(A) s adopting the same rate of net profit declared by assessee on the declared turnover to the undisclosed turnover as well. However, in the peculiar circumstances of the case, the net profit can be reduced to do justice to the assessee. Therefore, direct the AO to adopt 6.5% as net profit on the entire turnover of the assessee. However, make it clear that this finding shall be effective only for the relevant A.Y. and cannot be adopted as precedent for any other A.Y. - Assessee s appeal is partly allowed. 2020 (1) TMI 447 Unexplained income u/s.68 - Admission of additional evidence - HELD THAT:- The additional evidences were examined and found that they are basically copies of the affidavits, confirmations given by certain creditors and the bank statements of those creditors. In principle, they relate to the issue under consideration and they go to the root of the matter and shall definitely be of some use for adjudication of the issue judiciously. In our opinion, it is in the interest of administrational justice to admit the same. Accordingly, we direct the AO to consider the contents available on these papers and use them for adjudication of the issue, after granting a reasonable opportunity of being heard to the assessee. The AO is free to conduct requisite enquiries into the correctness of these papers, as per law. Repayment of the loans to the creditors - Repayment means, assessee paid the dues to the person, who is existing. That person received the funds and to that extent, the genuineness of the transaction assumes credibility. So long as there is no evidence with the AO to demonstrate such repayments were routed back to the payer, the transaction becomes genuine and therefore, there is no need for suspecting the same. The transaction becomes so genuine more so when the payments and repayments are done through the banking channels. AO is directed to examine whether the repayments are properly appropriated by the creditors, if not routed back into the accounts of assessee. Reasonable opportunity of being heard to the creditors is to be given in case such enquiries are undertaken. Thus, keeping all the issues open relating to the addition - Grounds remanded back to the file of AO. Appeal of assessee is treated as allowed for statistical purposes. 2020 (1) TMI 446 Deduction of various expenditure - Community Welfare Expenses - Temple Expenses - Prior Years Expenses - Mines Prospecting Expenses - expenses on Powerline, Marine Structure, Road Railway Sidings - Held that:- Following the decision in the earlier years, claim of expenses allowed and additions deleted. Employees stock option expenses - Held that:- the assessee has been allowed ESOP expenses as claimed in the Profit Loss Account and therefore, the resultant surplus / gains would be fully taxable, applying the same analogy. Accordingly, the reduction of income by ₹ 5.62 Lacs (including surplus of ₹ 1.10 Lacs) as done by Ld. AO would not be warranted. - to settle the things as per earlier decisions, we direct Ld. AO not to reduce the total income by ₹ 5.62 Lacs. Disallowance u/s 35D being preliminary expenses - Held that:- The Ld. CIT(A) allowed the same since in earlier AYs, it was held by first appellate authorities that the expenses were incurred for extension of business and therefore covered by Sec. 35D(2) of the Act. However, it was held that the deduction would start from year in which the project starts commercial production. Since, the project had started commercial production in June, 2002, the deduction of the same would be allowable to the assessee. Credit for MAT for the purposes of Charging interest u/s 234B - Held that:- The assessee was found eligible to claim MAT credit of ₹ 585.04 Lacs as per Sec.115JAA and therefore, the credit of the same was allowed. However, interest u/s 234B was computed before adjusting MAT credit. - interest was to be charged only after adjustment of tax credit. 2020 (1) TMI 445 Taxing surplus as per income and expenditure account - Withdrawal of the approval u/s 10(23C)(vi) as well as registration u/s 12AA - allegation of diversion of funds of the trust for personal purposes, non genuine scholarship expenses - Held that:- the Co-ordinate Bench [ 2019 (4) TMI 1215 - ITAT JAIPUR] and the approval u/s 10(23C)(vi) and registration u/s 12AA has since been restored, we do not see any infirmity in the findings of the ld. CIT(A) who has taken into consideration the restoration of approval so granted by the Tribunal and in absence of any other reasons/finding recorded by the Assessing officer, in granting the necessary relief to the assessee society wherein the surplus income was directed not to be brought to tax. Non genuine scholarship expenses - Held that:- the matter relating to scholarship expenses has been dealt with at length by the Co-ordinate Bench [ 2019 (4) TMI 1215 - ITAT JAIPUR] and which has been followed by the ld CIT(A) - Order of CIT(A) sustained. Depreciation on Building - test of ownership - Held that:- the fact that a formal sale deed has not been executed in favour of the assessee society cannot be held as basis for denial of claim of depreciation Further, ld CIT DR has submitted during the course of hearing that where the assessee society has already claimed and allowed the capital expenditure on construction of building as an application of income, the assessee society cannot be allowed depreciation claim on the said building in view of specific embargo placed by virtue of section 11(6) of the Act. There is no dispute that these provisions introduced by the Finance, Act 2014 are applicable for both the years under consideration. Therefore, it is a matter of record and it can be examined by the Assessing officer as to whether the capital expenditure so incurred by assessee society has been claimed as an application of income in any of the years under consideration or in the earlier years. - Matter remanded back. Addition of unexplained cash u/s 69A - unexplained money - the same was not recorded in the books of Integral Bank nor entered in the cash books of accounts of the assessee society - fee was collected from students in old denomination - Held that:- Undisputed and undeniable facts are that cash so found represents fees deposited by students with the assessee society as emerging from the statements of various persons recorded during the course of survey and even from the findings of the survey team. The cash so found is duly explained by the documentary evidence which is maintained in regular course by the assessee society. During the course of hearing, nothing has been brought to notice by the Revenue which controverts the said factual position. - CIT(A) rightly deleted the additions. 2020 (1) TMI 444 Additions us/ 69 / 69A towards undisclosed income found during the course of survey u/s 133A - unexplained stock - Addition based on the statement of the Director of the Company - retraction of the statement by way of letter - corroborative evidence to substantiate the addition - admission of additional evidence - Held that:- The retraction, if any, has to be based on the records and with proper documentary evidences which prove that the documents based on which the disclosure or the additional income has been offered were faulty. CIT(A) deleted the addition by observing that, Assessing Officer has simply rejected the explanation of the assessee merely n the ground that valuation was accepted by the assessee before the survey party and difference was offered from taxation. In my opinion, if the assessee can demonstrate that valuation adopted by the survey party was wrong with reference to the materials on record, then addition cannot be justified merely on the ground that it was offered for taxation. Though, the admission of the assessee is piece of evidence but the assessee can demonstrate that admission was wrong. - Order of CIT(A) sustained - Decided against the revenue. Admission of additional evidences under Rules 46A - Held that:- a conflict of opinions expressed by the revenue by holding that the submissions are only reiteration of earlier submissions and having grievance for allowing them under Rule 46A by the ld. CIT (A). - the ld. CIT (A) has given adequate reasons for admitting the additional evidences - Objection of the revenue rejected. Entitlement of deduction u/s 10A of the Act on the higher profits determined owing to the survey operation in a concern having unit at SEZ - Held that:- the Section seeks to promote and boost new business undertakings situated in free trade zones by providing suitable deductions - It provides for a 100 percent deduction of profits and gains derived by undertakings engaged in export of articles or computer software. In the instant case, the amount determined by the revenue by the assessee does not partake the nature of manufacturing and export of goods or articles. Hence, the benefit of the provisions of Section 10A cannot be accorded to the assessee in the instant year. - the Cross Objection of the assessee is dismissed. 2020 (1) TMI 443 Disallowance of salaries paid to expatriate employees of the assessee - head office expenses within the meaning of Section 44C - AO observed that the said expenditure was not debited by the assessee to the profit and loss account and the expatriate employees were not on the pay roll of the Indian branch. - Held that:- the issue raised by the revenue in this appeal stands covered in favour of the assessee by the various cited decisions. Therefore, following the principal of consistency, claim of deduction allowed. Expenses incurred for mobilization of deposits from non-resident Indian - The assessee submitted that these expenses were incurred by their head office and since the deposits were retained in the books of Indian branch, the related expenses incurred thereon are also debited to the Indian branch. The assessee has specifically submitted that these expenses are in the nature of salaries, travelling, advertisement and other incidental expenses - Held that:- following the earlier decision [ 2015 (11) TMI 1792 - ITAT MUMBAI] , decided in favor of assessee. Exchange Gain/Loss in valuation of outstanding Foreign Exchange Forward Contracts - Held that:- The ld. CIT(A) appreciated the contentions of the assessee and directed that this sum should be taxed only in the year in which the said forward contracts gets matured i.e. in A.Y.2003-04. The ld. CIT(A) also directed the ld. AO to grant deduction, being the loss arising on account of valuation of outstanding forward contracts as on 31/03/2001 as the same is to be allowed even as per analogy of the ld. AO. - Order of CIT(A) sustained. Transfer pricing adjustment - Correspondent Banking Activities - Held that:- when services are rendered free of charge to the AE by the assessee and similarly AE also provided reciprocal services free of charge to the assessee, there cannot be any reason for doubting the said transaction or make any transfer pricing adjustment thereon as both the assessee as well as the AEs are part of global conglomerate. The assessee had considerably benefitted out of earning income from Indian FIs and float income pursuant to correspondent banking activities and the said benefit directly flows to the assessee. The main business transactions have been accepted to be at arm s length and hence, the ld. TPO cannot separately treat the incidental benefit as a separate transaction unless it is shown that they are separate from the main business activities. Allocation of cost and mark up thereon - Held that:- Though we find lot of force in the aforesaid argument of the ld. AR, in any case, the nature of services are such that they are reciprocal in nature and hence, there cannot be any attribution of mark up on the same. Hence, we hold that no mark up should be loaded on the attribution of costs towards incidental marketing activities undertaken by the assessee in connection with the correspondent banking activities. No transfer pricing adjustment on account of correspondent banking activity is warranted in the instant case. - Decided in favor of assessee. Services provided by employees of the bank to overseas AEs - TPO applied TNMM as the MAM with net cost plus as the profit level indicator. - Held that:- in case of certain employees, the assessee had suo-moto not claimed deduction of proportionate salary pertaining to services provided to foreign AEs. Hence, the same cannot be subject matter of consideration while making TP adjustment as it would lead to double disallowance. In any case, these employees render liasoning and coordination of services at group level as a mere incidental activity and the same need not be even considered as separate international transaction warranting any benchmarking thereon. - Additions deleted. TP adjustments in relation to support services in relation to External Commercial Borrowings (ECBs). - The ld. TPO observed that the arm s length price in respect of services rendered for continuing ECB transactions is required to be worked out because the overseas branch is helped by a local branch for the documentation, collecting fees, ensuring smooth and timely payment of interest etc., and credit review and monitoring of performance, monitoring of breach of covenants, monitoring of assets, co-ordination with other banks, lenders to clients under syndication and preparation of watch list report. - Held that:- The said receipt of fee / commission income has been accepted to be at arm s length. Hence, there is no question of further fee that is required for the assessee in respect of continuing ECBs. We find that the ld. CIT(A) had categorically observed that HSBC India does not assume any risk in respect of continuing ECBs compared to the nature of service rendered by them.- No additions. 2020 (1) TMI 442 Transfer pricing (TP) adjustments - selection of comparable - Function test - The six comparables challenged by the assessee for exclusion - assessee is engaged in the business of providing IT enabled services to its AEs and is also registered with Software Technology Parks of India (STPI) - Corporate and Professional services - Financial Services - Held that:- Ld. AO/TPO is directed to recompute the ALP after excluding the aforesaid six comparables. Customs 2020 (1) TMI 441 Jurisdiction - Advance Authorization - It is alleged that at the time of import, a copy of Advance Authorization was produced before the Customs Authority and had claimed benefit of Notification No.96/2009-CUS and No. 98/2009-CUS. - It is contended that such show-cause notice was replied and requested to cross-examine the owners of the trucks and cross-examination was carried out and during the course of such cross-examination, the transporters have accepted that the material was transported. Whether Custom Authority has no jurisdiction for issuing any notice or adjudicate as refund was given by the DGFT and advance authorization licence is still in existence? HELD THAT:- The DRI has issued the impugned notice proposing recovery of excise duty refunded by the department of DGFT by way of TED for the material supplied to 100% EOU (deemed export) as well as proposing recovery of interest and imposition of penalty on the petitioners, as also on the conoticee. It also appears that during the adjudication proceedings, the department has sought for information from the concerned department Central Excise regarding examination of goods by it. It is further stated therein that no refund / rebate of the duty paid on their supplies to the EOUS has been granted to M/s. Rajhans Impex Pvt. Ltd., Jamnagar. It also reveals from the letter dated 28.08.2014 of the Superintendent (PI), Central Excise Division, Surendranagar that the goods were sent to M/s.Shrikrupa Exports and as per the affidavit filed on behalf of Srijan Exports, Chandigrh (page Nos.173-174 of the petition), the firm has received the consignment with form No. ARE-3 and the same has been examined by the jurisdictional Superintendent of Central Excise and the officer has visited the factory premises after verifying the contentions of the documents and the material received, has certified the facts of receipt of the goods. It is pertinent to note that in view of Rules 25 and 26 of the Central Excise Rules referred to hereinabove, it is admitted legal position that if there is any breach under the said Rules, the Central Excise Department has an authority to confiscate and impose penalty upon defaulting individual or the firm. Now, in this case, it is an admitted fact that the Excise Department has clearly informed the Custom Department that no refund was extended by it to the petitioners herein - the authority which may take action against the petitioners is DGFT. Of course, DRI can, after investigation, inform the concerned DGFT to take action against the present petitioners for breach of condition of Advance Authorization or deemed export or for wrongful taking TED. Now, admittedly, the petitioner is holding Advance Authorization and that Advance Authorization has not been cancelled by the competent authority. It is also admitted fact that whatever refund has been granted, is issued by the DGFT. It also appears from the correspondence between other department that the jurisdictional Excise Offices have certified the facts of receipt of the goods though the material was not physically verified. It also appears that DRI is demanding the amount which has been refunded by the DGFT. It is an admitted fact that the Advance Autorization Licence of the petitioners is still valid and no action is taken by the DGFT for breach of condition thereof. As such, initiation of proceedings by the customs is nothing but an exercise of power in excess of jurisdiction. When the Custom Department has exercised power in excess of jurisdiction, than, this Court can exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India. Therefore, considering peculiar facts of this case, the impugned order-in-original is required to be set aside. Petition allowed. 2020 (1) TMI 440 Mis-declaration of value and description of goods - Base Oil - penalty u/s 112 of CA - finalization of provisional assessment - extension of time for adjudication of SCN - HELD THAT:- The DRI or the Custom Authorities, after the imported goods had been cleared from the custom area, had no authority to draw fresh samples on 28.01.2013 of such cleared imported goods from the factory premises in view of the provisions of Section 144 of the 1962 Act. In the absence of any extension of time after expiry of one year w.e.f. 28.03.2018 for adjudication on the Show Cause Notice dated 07.02.2014 (P-6), either under Section 28 Sub Section (9) or 9(A) of the 1962 Act, we hold that the impugned Show Cause Notice has lapsed. Petition allowed. 2020 (1) TMI 439 Requirement of Registration under Rules 3 and 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether the requirements are procedural in nature or not - HELD THAT:- The learned Tribunal has erred in holding that the Rules are merely procedural or directory in nature and upholding the grant of exemption to the Assessee in respect of Bill of Entry No.550344 dated 28.6.2003 by which the goods were imported and cleared on 30th June 2003. The Certificate issued by the Superintendent of Central Excise, relied upon by the learned counsel for the Assessee is not under the aforesaid 1996 Rules but it is only a Certificate that the Assessee has not availed the Cenvat Credit on that consignment and that Certificate has nothing to do with the 1996 Rules in question. There are no justification for the learned Tribunal to hold that these Rules are only procedural or directory in nature and therefore it could be applied for the import made at prior point of time. Then, the very purpose of Rules and requirement of the Assessee to apply under Rule 4 for the intended imports in future would be frustrated, if these Rules were to be applied retrospectively to the imports already made. There was no question of substantial compliance by the Assessee. The very initiation of procedure of registration and application was not undertaken by the Assessee in the present case. It is well settled law that to avail the exemption of duty under any Notification, the Rules and Regulations and the conditions prescribed therein have to be strictly adhered and there is no place for equity or intendment in the interpretation of the taxing Statutes. By holding that the Rules of 1996 are only procedural or directory in nature, the learned Tribunal has frustrated the very purpose of Rules 3 and 4 in question by holding that the Assessee is entitled to the exemption for import made on 28.6.2003. The controversy in the present case is not with regard to the valuation of the goods in question or rate of duty, but, the question is of the wrong exemption claimed by the Assessee and granted by the Tribunal - Therefore, the Appeal is maintainable before this Court in accordance with law and the said objection of the Assessee is overruled. Appeal allowed - decided in favor of Revenue. 2020 (1) TMI 438 Refund the amount deposited for the purposes of import - finalization of provisional assessment - time limitation - stand of the Revenue is that there is no time limit for finalisation of the provisional assessments and hence there is no limitation that would apply. HELD THAT:- This very issue has been settled by the Board even as early as in 2007, in favour of the assessee. There is thus no justification for the respondents in the present case to have tarried so long and to delay finalisation of assessments as well as consequential refunds to the petitioner. The refund will be paid over to the petitioner within a period of four weeks from date of receipt of copy of this order along with interest in terms of Section 27(a) of the Customs Act, computed from three (3) months from 17.12.2007 being date of receipt of the application in respect of one claim and three (3) months from 10.09.2007 in regard to the other claim - petition allowed. 2020 (1) TMI 437 Prayer for seeking a Test Report in respect of the sample of goods imported by the Assessee, rejected - HELD THAT:- The cryptic order by the learned Tribunal rejecting the prayer of the Assessee was unjustified. An evidence in this regard was led by the Assessee before the adjudicating authority in the form of a Test Report and upon its negation, the Assessee simply wanted a direction to the authority to secure a Test Report from another Government Laboratory or accredited Laboratory so that the evidence of the Assessee can be weighed against that. The powers of a Civil Court are vested with the Tribunal as well and in any case the Tribunal being the fact finding authority, has co-extensive powers with that of the adjudicating authority. Refusal of the Assessee's application to summon such a Test Report merely because the counsel failed to point out the relevant provisions of law was not justified. Appeal allowed. 2020 (1) TMI 436 Valuation of imported goods - polyester viscose knitted fabric - rejection of declared value - appeal contends that the adjudicating authority lacked jurisdiction to initiate proceedings as the assessing officers were under the supervision of Commissioner of Customs (Import), Nhava Sheva - HELD THAT:- In ordering the redetermination of value, the adjudicating authority has also included the goods, viz. polyester viscose knitted fabric , that were in conformity with the declaration in the bill of entry, even though of lesser quantity, which eliminates scope of action under Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as these were not misdeclared. It is also seen that the adjudicating authority, while ordering redemption, also imposed the condition that the goods must be cleared for home consumption - In the light of the claim of the appellant, even if an afterthought on which we desist from rendering a finding at this stage, insistence on clearance for home consumption does not appear to be appropriate. Once the goods are offered for redemption, these cease to be vested with the Central Government and the imposition of conditions, which precludes re-export, is not sanctioned by law. Matter remanded back to the adjudicating authority to decide the show cause notice afresh in accordance with the provisions of law - appeal allowed by way of remand. 2020 (1) TMI 435 Mis-declaration of imported goods - allegation that the appellant was trying to import Aluminium Alloy Ingots in the garb of Aluminium Scrap Throb - HELD THAT:- The goods stands described in the export invoice as Aluminium scrap and as per the definition of Aluminium scrap, the goods should be remelted into some shapes for the convenience of shippings - Merely because the high Aluminium contents have been found in the goods, the same will not convert the scrap into the Aluminium ingots. There are no reasons to uphold the impugned orders in view of the facts that the goods stands described in the various import documents as Aluminium Scrap Throb and there is no evidence to rebut the said description given by the exporter. Appeal allowed. 2020 (1) TMI 434 Maintainability of appeal - Amendment of shipping bills - order passed by the Commissioner is communicated by Assistant Commissioner - HELD THAT:- The Commissioner should look into the request for conversion of shipping bills. The letter/order also shows that the decision passed by the Commissioner is communicated to the appellant by the Assistant Commissioner. The order having been passed by the Commissioner rejecting the request for conversion of shipping bills, the appeal is maintainable to the Tribunal - The defect, therefore, is vacated. Registry is directed to admit and number the appeal. 2020 (1) TMI 411 Jurisdiction - power of DRI to draw samples - Clearance of goods under provisional assessment - Section 18 of the Customs Act, 1962 - basic arguments of the petitioner is that the Directorate of Revenue Intelligence, has in fact no jurisdiction to draw the samples, after clearance of goods in view of the mandate of Section 144 of the Customs Act, 1962. HELD THAT:- It has not been disputed between the parties that admittedly the samples can only be and were drawn under Section 144 of the Act. It is further evident that samples can be drawn only before the imported goods are cleared/removed from the customs area. In the present case, at the time of clearance of imported goods, provisional assessment was framed as the declared description of imported goods was in doubt. The Proper Officer in terms of the provisions of Section 144 of the Customs Act, 1962, drew samples, while permitting the clearance of goods, after provisional assessment under Section 18 of the Customs Act, 1962, against a bond supported with a bank guarantee. Subsequently, upon receipt of the test report(s) from official laboratories vindicating the description of goods as disclosed by the petitioner in his Bill of Entry, the Proper Officer framed final assessment in terms of the declared description and valuation of goods and the customs duty already paid by the petitioner. Consequently, the Proper Officer cancelled the bond and returned the bank guarantee furnished earlier for securing the additional demand, if any. In the present case, after the release of imported goods approximately by April 2016 from the custom area, there was no power with the authorities, much less under Section 144 of the Act, to draw samples at a subsequent stage i.e. on 11.08.2016 from the factory premises. The Panchnama effecting the seizure of imported stock of the petitioner(s) are quashed - Respondent No.2/DRI is directed to release the seized material of the petitioners and also return the resumed documents of the petitioners. Corporate Laws 2020 (1) TMI 433 Prayer for amendment in the Judgment dated 18th December, 2019 - Conversion of Private Company into Public Company on the basis of average annual turnover - benefit under Section 43A (2A) of Companies Act - HELD THAT:- Section 43A (2A) while empowers a 'Public Company' to become a 'Private Company' on or after commencement of the Companies (Amendment) Act, 2000 by informing the matter to the Registrar for substitution of the word 'private company' with the word 'public company' in the name of the company upon the register and certificate of incorporation issued to the company and its memorandum of association but under Section 43A (4) such 'private company' which has been made public company by virtue of the said provision, will continue to be a 'public company' until it has, with the approval of the Central Government and in accordance with the provisions of the said Act, again become a 'private company'. For the purpose of appreciation, in terms of Section 43A (4), as referred to by the Registrar of Companies, the 'Tata Sons Limited' which was a 'Private Company' has becomes a 'Public Company' by virtue of the provision aforesaid shall continue to be a public company, having not taken any approval from the Central Government and in accordance with the provisions of the said Companies (Amendment) Act, 2000 to become a 'Private Company'. n terms of Section 465 of the Companies Act, 2013, all provisions of the Companies Act, 1956 stand repealed except provisions of Part IX A of the Companies Act, 1956 which applies mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies - Section 43A (2A) was inserted in the year 1975 in Companies Act, 1956 as amended in the year 2000 stood repealed by enactment of the Companies Act, 2013. In place of the old provision of Section 43A for 'conversion of the company' and 'conversion of Articles of Association', now Section 18 and Section 14 of the Companies Act, 2013 are applicable. The stand taken by Mr. Sanjay Shorey, Director Prosecution, Ministry of Corporate Affairs, who appeared on behalf of the Registrar of Companies, Mumbai that in absence of any prescription by the Central Government under any Rule in terms of Section 2(66), for the purpose of Section 2(68) ('private company'), the paid up share capital should be read as zero . However, such submission cannot be accepted as there cannot be a 'Private Company' or 'Public Company'. For the said reason, in amended Section 2(68), it is specifically mentioned that as may be prescribed by the Central Government (i.e. under the Rules in terms of Section 2(66)) - the prayer for amendment in the Judgment dated 18th December, 2019 is rejected. No ground is made out to amend the Judgment dated 18th December, 2019 in absence of any factual or legal error apparent on the body of the aforesaid Judgment - There is a typographical error at Paragraph 171 wherein un-amended Section 2(68) has wrongly been typed which has been ordered to be corrected. Application dismissed. Service Tax 2020 (1) TMI 432 Refund claim - time limitation - the contention of the learned counsel for the Revenue appears to be correct and there seems to be no discussion on the issue of limitation - HELD THAT:- The present Appeal disposed off with liberty to the Revenue to raise the said issue again before the learned Tribunal and we expect the learned Tribunal to pronounce upon the said issue after giving opportunity of hearing to both the parties. 2020 (1) TMI 431 Refund claim - amount deposited under a mistake of law - applicability of time limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- One has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without authority of law. When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not Service Tax or Excise duty and Section 11B of the Act has no application in such cases. Reliance can be placed in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ]. Refund allowed - appeal allowed - decided in favor of appellant. 2020 (1) TMI 430 Nature of activity - sale or service - Information Technology services - deemed sale or not - the supply of packed Antivirus Software to the end user by charging license fee - Whether the Antivirus Software provided by the Appellant to the users in packed CDs is a provision of service under information technology software and hence leviable to Service Tax prior to 1 July, 2012 as also after 1 July, 2012? - demand alongwith interest and penalty - extended period of limitation. Whether the meaning assigned to information technology software under section 65(53a) of the Act for a period prior to 1 July, 2012 would cover Quick Heal Antivirus Software ? - HELD THAT:- The Antivirus Software developed by the Appellant is complete in itself to prevent virus in the computer system. Once the computer system is booted, the Antivirus Software begins the function of detecting the virus, which continues till the time the computer system remains booted. The computer system only displays a message that viruses existed and that they have been detected and removed. No interactivity takes place nor there is any requirement of giving any command to the software to perform its function of detecting and removing virus from the computer system. It is also seen from the meaning assigned to interactive that a program should involve the user in the exchange of information. There has to be action and communication between the two. A user should communicate with the computer facility and receive rapid responses, which can be used to prepare the next inputs. In contract, in other softwares like ERP, EXCEL, MS Word, there is continuos interaction between the user and the computer system and these softwares perform only after receipt of input from the user - Such being the position, no service tax was leviable under section 65(105)(zzzze) of the Act prior to 1 July, 2012. Even after 1 July, 2012 the definition of information technology software under section 65B(28) remained the same and so also service tax was not leviable. It is clear from the decision of the Supreme Court in TATA CONSULTANCY SERVICES VERSUS STATE OF ANDHRA PRADESH [ 2004 (11) TMI 11 - SUPREME COURT] that intellectual property, once it is put on the media and marketed could become goods and that a software may be intellectual property and such intellectual property contained in a medium is purchased and sold in various forms including CDs. The agreement provides that the licensee shall have right to use software subject to terms and the conditions mentioned in the agreement. The licensee is entitled to use the software/RDM services from the date of license activation until the expiry date of the license. The licensee is also entitled for the updates and technical support. The conditions set out in the agreement do not interfere with the free enjoyment of the software by the licensee. Merely because Quick Heal retains title and ownership of the software does not mean that it interferes with the right of the licensee to use the software. The transaction in the present Appeal results in the right to use the software and would amount to deemed sale . It is, therefore, not possible to accept the contention of the learned Authorized Representative of the Department that the transaction would not be covered under sub-clause (d) of article 366(29A) of the Constitution. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 429 Refund of unutilized CENVAT Credit - Rule 5 of CCR - business of software trading - Export of services - place of provisions rules - intermediary services - the place of provision of services for an intermediary would be the location of the service provider. According to the Revenue, since the service provider is located in India, the provision of service by the respondent would not be export of services . HELD THAT:- In the present case, not only does the agreement specifically mentions that there is no relationship of principal and an agent between Microsoft and the respondent but it is also clear from the agreement that the respondent is free to sell the product at any price to the customer, though the price to be paid by the respondent to Microsoft is fixed. The agreement also provides that payment has to be made to Microsoft even if the customer does not pay the respondent. This is, therefore, a case where the respondent provides the service or supplies the good on his own account. The Assistant Commissioner, while rejecting the refund claim, of the respondent has, however, observed that nature of provision of service of the repondent is arranging and facilitating procuring main services and transmitting the same to their overseas customers and so it would be in the nature of intermediary service. In coming to this conclusion, the Assistant Commissioner noticed that the purchase orders received by the respondent from the overseas customers were being passed on to the Microsoft and that the invoices issued by the Microsoft reveal that they have mentioned the name of the end-user customer in the specific column provided for the purpose - The conclusions drawn by the Assistant Commissioner are not correct. It cannot be doubted that two separate transactions had taken place. On the basis of the purchase orders placed by the overseas customers, the respondent purchased the software license from Microsoft for which it made payments to Microsoft. The tax invoice of Microsoft is billed to the respondent. The address of the Indian affiliate of end customer is shown to be in India. The Respondent receives the payment from the overseas customers. The payment made to Microsoft is independent of any payment received by the respondent from the overseas customers. There is, therefore, no error in the finding recorded by the Commissioner (Appeals) that the respondent is not an intermediary . The Commissioner (Appeals) may not have referred to the invoices, but he has referred to the balance sheet of the respondent. The invoices do not indicate that the respondent would be an intermediary . In fact they only support the case of the respondent that it is not an intermediary . The Channel Agreement has been taken into consideration by the Commissioner (Appeals) and therefore, the Appellant is not correct in contending that it has not been taken into consideration - In such a situation, when service is provided by the respondent on its own account, the respondent cannot be called an intermediary . Thus, the provision of service provided by the respondent has to be treated as export of service under Rule 6A of the 1994 Rules. The two reasons pressed by the Appellant for not treating it as export of service cannot be accepted. Rule 9(c) provides that in the case of intermediary services , the place of provision shall be the location of the service provider. This Rule would not be applicable as the respondent is not an intermediary. Refund is to be allowed - appeal dismissed - decided against Revenue. 2020 (1) TMI 428 Transport of Goods by Road Service - reverse charge mechanism - period 2005-06 to 2009- 10 - failure to make payment of service tax as well as to take registration - demand alongwith interest and penalty - HELD THAT:- The appellant assessee is not disputing its liability for payment of Service Tax and have in fact paid the Service Tax on the basis of their calculation - Since the appellant is a service recipient and discharging the Service Tax liability under the Reverse Charge Mechanism , they are entitled to abatement of 75% under Notification No.32/2004-ST dt. 03/12/2004 as amended by Notification No. 01/2006-ST. The issue is squarely is covered in the decision in the case of M/S. SREE KANYA COMBINES VERSUS CCE, VISAKHAPATNAM-II [ 2016 (8) TMI 848 - CESTAT HYDERABAD ] where it was held that The service tax on renting of immovable property was not paid as the issue was contentious an there were decisions in favour of assessee also. Thus, present is a fit case for invoking the provision of Section 80 and accordingly, the penalty imposed under Section 77 and 78 of the Finance Act, 1994 are set aside. The matter is remanded to the Adjudicating Authority for the limited purpose of calculating the Service Tax liability after considering that some payments were made to new Truck owners who have not issued any consignment notes. There is no liability of Service Tax in such transactions - appeal allowed in part by way of remand. 2020 (1) TMI 427 Classification of services - Franchise service or not - appellant has entered into agreements with various independent bottlers who possesses the necessary licenses for manufacturing of alcoholic liquors - view of the Revenue is that the appellant has granted representational right to the CBUs and that such service appropriately classifiable as Franchise Service - CBEC Circular No. 249/1/2006-CX.4 dated 27.10.2008. HELD THAT:- As per the said circular, the appellant being brand owner and earned the profit/surplus, the same being in nature of business profit and the same is not chargeable to service tax. The said circular has not been withdrawn by the CBEC yet. Moreover, the CBUs are paying service tax under the category of Business Auxiliary Service which means the appellant is not a service provider but is a service recipient, in that circumstances, relying on the decision of M/S. BDA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [ 2015 (6) TMI 586 - CESTAT NEW DELHI] where it was held that the appellant are the Brand Owner of IFML and M/s. Pilkhani is a job worker manufacturing IMFL on behalf of the appellant and the amount retained by the appellant is the business profit not liable to be taxed under the Finance Act, 1994 under the category of Intellectual Property service. Thus, the appellants are not liable to pay service tax - appeal allowed - decided in favor of appellant. 2020 (1) TMI 426 Renting of Immovable Property Service - co-owners - benefit of N/N. 06/2005-S.T. dated 01.03.2005 - appellant is receiving rent with the co-owners and the appellant share is deposited in their account separately - Revenue is of the view that the premises rented out is treated as one and therefore, on the rent received, the appellant is liable to pay service tax under the category of Renting of Immovable Property Service - whether being a co-owner, the appellant is entitled for exemption under Notification No. 06/2005-S.T. dated 01.03.2005 or not? HELD THAT:- The issue decided in the case of ANIL SAINI, KABAL SINGH, NEELAM SAINI, SURINDER KAUR, JASWINDER SINGH, PARMOD KUMAR CHAUDHARY, SUKHJEET JODHA VERSUS CCE, CHANDIGARH-I [ 2017 (1) TMI 101 - CESTAT CHANDIGARH] where reliance placed in Tribunal in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel [2015 (9) TMI 790 - CESTAT MUMBAI] wherein this Tribunal has held that the ownership of the Property and providing of taxable renting of immovable Property by the four appellants in this case is in their individual capacity and, therefore, their tax liability should have been determined by considering their individual rental receipts and not collective one, benefit on notification was extended. As the issue has already decided by this Tribunal and the rent received by the appellant remains within the threshold limit of SSI exemption under N/N. 06/2005-ST dated 01.03.2005, therefore, the appellant is entitled for exemption under N/N. 06/2005-S.T. dated 01.03.2005. Hence, no service tax is payable by the appellant. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 425 Exemption to taxable service provided for distribution of electricity - Benefit of N/N. 32/2010-ST dated 22/06/2010 - denial on the ground that the appellant is not a distribution licensee or distribution franchisee or any other person authorized under the Electricity Act for distribution of electricity - HELD THAT:- Reliance can be placed in the appellant own case AGARWAL TRADERS VERSUS C.C.E. ST, ROHTAK [ 2018 (6) TMI 132 - CESTAT CHANDIGARH] where it was held that As the appellant is providing services on behalf of the principal, who is having a license as distribution licensee to distribute electricity under the Electricity Act. Therefore, the benefit exemption N/N. 32/2010-ST dated 22/06/2010 cannot be denied to the appellant. Thus, the appellant is entitled to the benefit of N/N. 32/2010-ST dated 22.06.2010 - appeal allowed - decided in favor of appellant. 2020 (1) TMI 424 Refund of unutilized Cenvat Credit - export of services - Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE(NT) dated 18.6.2012 - place of provision of services - HELD THAT:- On the identical issue of refund Under Rule 5, various refund claims were filed by the appellant and there was a chequered history of the overall cases - In the present case matter was remanded by the tribunal to the Commissioner (Appeals) for reconsideration. However, the Commissioner (Appeals) also remanded the matter to the Adjudicating Authority. Appeal allowed by way of remand. 2020 (1) TMI 423 Levy of service tax - commission earned by the Managing Director of the appellant company, apart from his fixed salary, is in lieu of services provided by him for promotion of the sales in the market - payment of TDS under the head salary - HELD THAT:- If the entire remuneration stands considered by Income Tax Authorities as salary, the same cannot be considered as service, so as pay the service tax. The Income Tax Authorities are the prime authority to adjudge the said issue. If according to the learned Advocate the Income Tax Authorities have considered the entire remuneration as salary and have taxed the same accordingly, the said fact would have a bearing on the disputed issue. Inasmuch as, the adjudicating authority has not dealt with the said aspect and has not verified the fact of assessment by Income Tax Authorities under the head salary , it is deemed fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority for fresh consideration - appeal allowed by way of remand. Central Excise 2020 (1) TMI 422 Rectification of mistake - power of appellate tribunal to rectify mistake - time limitation - Section 35G of the Central Excise Act, 1944 - Section 9D of the Act of 1944 - HELD THAT:- Section 35C(2) of the Act of 1944 however vests the Appellate Tribunal with the power of rectifying any mistake apparent from the record and amending any order passed by it. No doubt, this power requires to be exercised within six weeks from the date of the order - the certified copy of the order under appeal was furnished to the appellant-assessee on 19-3-2019 and therefore, the six months period reckoned from that date expired on 18-9-2019 and that was the date on which this appeal was preferred. The Tribunal would be well within its powers in entertaining an application under Section 35C(2) of the Act of 1944 for rectification of the order, if warranted on facts - Appeal disposed of permitting the appellant-assessee to submit an application under Section 35C(2) of the Act of 1944 before the Tribunal within one week from the date of receipt of a copy of this order. 2020 (1) TMI 421 CENVAT Credit - HDPE/PP Bags used for packing of their final product, i.e. cement, destroyed in the course of packing - HELD THAT:- The claim of the appellant in respect of packing bags being destroyed in the process of packing and getting torn, is a routine feature and on going through the series of pictures filed along with the appeal paper book, it is observed that owing to various reasons i.e. use of high pressure, automatic rotary machine, which is used under compressor for packing cement in the packing bags and due to high pressure, some bags got torn/brust. Even, the temperature of the cement when it is being packing , is very high and the entire movement of the cement upto loading into the truck and wagons is automatic, which also results in damage of the cement bags in the process. The issue is no more res integra and is covered by the decision of the Tribunal in the case of MADRAS CEMENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [ 2010 (7) TMI 398 - CESTAT, CHENNAI ] where it was held that In the absence of any legal requirement to reverse credit, appellants cannot be asked to reverse the credit taken on the inputs which they have put to use for the intended purpose but which have become torn and non-useable in the course of manufacture/use as packing material. Credit allowed - appeal allowed - decided in favor of appellant. 2020 (1) TMI 420 Relevancy of Draft Circular - Process amounting to manufacture - process of blending of Ethanol with Motor spirit - case of the department is that addition of 5% Ethanol in the Motor Spirit is amounting to manufacture and accordingly clearance of Motor Spirit blender with Ethanol is liable to Excise Duty. The Learned Adjudicating Authority has heavily relied upon the Draft circular F. No.83/04/2007-CX which intended to withdraw the Circular No.83/83/94-CX dated 13.12.1994 which circular was heavily relied upon by the appellant - HELD THAT:- The draft circular which was never issued as a circular should be completely ignored and no reference can be drawn from such circular. Since the draft circular was not issued the circular No. 83/83/94-CX dated 13.12.1994 was continued and effective. Therefore, the finding of the Learned Adjudicating Authority based on the draft circular is not sustainable - In this situation we are of the view that the entire matter needs to be given a relook by considering the various alternative submission made by the appellant. Appeal allowed by way of remand. 2020 (1) TMI 419 Rectification of mistake - scope of SCN - Fraud - HELD THAT:- While giving findings on such tampering with evidence on the basis of Section 73 of the Indian Evidence Act, handwriting and signature available on those tampered documents were compared and after being satisfied that those were really tampered documents, it was observed by me that fraud was practised on the Court and the appellant was denied relief of any kind since its case was not based on justice equity and good conscience. There is no merit in ROM application which is again based on false pleading like no opportunity was given to the appellant to defend the allegation of fraud and the proceeding was concluded behind the back of the Appellant - ROM application is rejected with a cost of ₹ 10,000/- imposed on the appellant to be paid to the Government Treasury within one month of communication of this order. 2020 (1) TMI 418 Clandestine removal - demand on the basis of third party records - corroborative evidences or not - time limitation - Section 11(4) of the Central Excise Act, 1944 - HELD THAT:- It is found from the contents of the Show Cause Notice that the allegations are based on record maintained by a third party. The said record did not bear full name of the Appellant. But the authorities assumed that the short name mentioned in the documents was that of the Appellant. Therefore, the demand was made against the Appellant solely on presumption and assumption, without any corroborative evidence placed on record. No demand can be sustained solely on the basis of privately maintained, third party records. Merely because the investigating authorities found certain private records maintained by M/s. Pankaj Ispat Ltd. (PIL) and tacit admission of M/s. PIL regarding receipt of goods without cover of Invoice and without payment of Duty, from a party having similar name to that of the Appellant, cannot conclusively prove that the Appellant has indeed cleared finished products clandestinely, without payment of Duty, to M/s. PIL. Thus, it has been consistently held that demands of whatever nature cannot be confirmed solely on the basis of thirds party evidence/record - The Revenue has clearly failed to corroborate with reasonable accuracy the aspect of production and clandestine removal by the Appellant. Time limitation - HELD THAT:- The matter was in the knowledge of the Revenue right from 19-9-2012, when the Statement of Shri Pankaj Agrawal, Director of M/s. PIL was recorded and the sole piece of evidence in the shape of his records, was withdrawn by the officers. Thereafter, a Statement dated 12-12-2013 of Ms. Permanand Sahu, Accountant and Authorized Signatory of the Appellant was also recorded under Section 14 of the Central Excise Act, 1944. The Revenue was sleeping on the issue and could not adduce a single piece of evidence against the Appellant and issued the Show Cause Notice as late as on 3-2-2016 - Therefore, the Show Cause Notice dated 3-2-2016 issued after four years is hopelessly barred by limitation. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (1) TMI 417 Jurisdiction - Scope of Inter-state sales - supply of the goods from Mumbai to Delhi to execute the works contract - CST Act, 1956 - applicability of Delhi Sales Tax Act, 1975 - it was held that the incidence of Central Sales Tax or even sale of goods, occurs where the goods are appropriated to the contract. In this case, the place where the appropriation took place, is undoubtedly Mumbai. HELD THAT:- SLP dismissed. 2020 (1) TMI 416 Validity of SCN - Allegation that the SCN is illegal only on account of the fact that the reasons for initiation of revision proceedings have not been made part of the notice under Section 74A(2) of the DVAT Act - HELD THAT:- Section 74A, which vests power of revision on the Commissioner does not per se require that the reasons for initiation of revisionary proceedings should be communicated with the notice under Section 74A(2). At the same time, there cannot be any doubt that good and sufficient reasons, which are germane to the issue, should be recorded by the Commissioner at the time when he exercises his discretion to initiate revision proceedings under Section 74A of the DVAT Act. So far as the claim for refund made by the petitioner is concerned, we find that the said claim has been made by the petitioner on 28.03.2018 in the requisite form DVAT-21. The said refund in terms of Section 38 of the Act read with Rule 34 of the DVAT Rules, 2005 was liable to be granted within two months of the claim being made. There is no reason for the respondent to withhold the said refund. Mere pendency of the revision proceedings cannot be a justification for withholding the refund since that is not a ground for withholding the same under Section 38 and 39 of the DVAT Act. The respondent is directed to forthwith refund the excess tax deposited by the petitioner. The same be credited to the account of the petitioner positively within the next two weeks, along with the interest as admissible in law. List on 03.02.2020. 2020 (1) TMI 415 Re-opening of concluded Assessment - Fixation of tax rate at 16% against 10% - Writ court while deciding issue relating to issuance of show cause notice to re-open assessment held that revenue was not justified in reopening assessment as assessments were complete and tax was paid by assessee - HELD THAT:- The issue is squarely is covered in the case of THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER VERSUS M/S. SUNDEK INDIA LTD. [ 2015 (9) TMI 45 - MADRAS HIGH COURT] where it was held that the Present court fully in agreement with holding that assessments in respect of respondent / assessee having been completed pursuant to order passed by Special Tribunal and tax at rate of 10% was also collected, Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification. Appeal dismissed. 2020 (1) TMI 414 Rejection of Input tax credit claim - imposition of penalty and interest - seller did not file the return - HELD THAT:- The petitioner firm had acted absolutely in a bona fide manner, as is also apparent from the impugned order dated 20.11.2017, as contained in Annexure-5 to the writ application, and had discharged its tax liability by paying the VAT amount to the selling dealer and had filed its return within time, claiming the applicable ITC, but it was solely due to the laches on the part of the selling dealer, that the return had not been filed by the selling dealer, and the tax amount was not deposited in the Government Treasury. As such, it is apparent that the amount of tax and interest has been saddled upon the petitioner firm and has also been realised by way of garnishee order, which have been challenged in the other writ application, for no fault on part of the petitioner, but solely due to the fault of the selling dealer. We are satisfied that the petitioner had discharged its liability under the VAT Act, and there being no mechanism under the JVAT Act, by which, the petitioner could compel the seller also to discharge their duty, it was not within the competency of the petitioner to compel the selling dealer to file the return within the stipulated time, and deposit the tax collected from the petitioner in the Government Treasury - We do not intend to enter into the challenge to the vires of Section 18(8) sub-clause (xvii) brought by way of amendment, or into the questions of limitation, or defect in the notice, if any, as we are satisfied that due to the bona fides on part of the petitioner, no punitive action was required to be taken, or warranted against the petitioner. Application allowed. 2020 (1) TMI 413 Whether the State Government can levy the amount more than the actual cost incurred upon the excise staff deployed in distilleries / compounding and blending plants? - whether if one excise staff is deployed in more than one distillery / compounding and blending plant, can the State Government recover the entire expenses incurred upon such staff, separately from all the distilleries / compounding and blending plants, in which such staff is deployed? HELD THAT:- The only plausible answers to these questions can be, that the State Government can only realise from the distilleries / compounding and blending plants, the actual expenses incurred on the salary, allowances etc., of the excise staff deployed in such distilleries / compounding and blending plants, and in case one excise staff is deployed in more than one distillery / compounding and blending plant, the actual cost can be realised proportionately from each of them. In no case the State Government can be allowed to levy the amount more than the actual cost incurred upon the excise staff deployed in distilleries / compounding and blending plants, and further, in case one excise staff is deployed in more than one distillery / compounding and blending plants, to recover the entire expenses incurred upon such staff, separately from all the distilleries / compounding and blending plants, as allowing such practice shall amount to undue enrichment to the State Government in garb of the Rules 9 and 36A of the aforesaid Rules, which these rules do not permit. A plain reading of both these rules clearly show, that they only permit the actual cost to be realised. Thus, no extra amount can be levied from the companies, than the actual cost incurred by the State Government on deployment of the excise staff. The other point to be kept into consideration is that the cost leviable under Rule 9 shall apply to only those distilleries, which are licensed solely and wholly for the purpose of manufacturing either denatured spirit or any other commercial spirit, unfit for human consumption, but it would not include those distilleries which are licensed for manufacturing along with spirits unfit for human consumption, also potable liquor - Similarly the fees leviable under Rule 36-A of the aforesaid Rules shall apply only to the compounding and blending plants of the foreign liquor. Matter remanded back to the Respondent Excise Commissioner, for re-determining the fees / costs leviable from the petitioners Companies, keeping in view of the aforesaid guidelines - appeal allowed by way of remand. Indian Laws 2020 (1) TMI 412 Dishonor of Cheque - section 138 of NI Act - cheque was issued in discharge of any debt or liability of the company or not - HELD THAT:- In the instant case, the respondent clearly had a liability. As observed above, there was an earlier adjudication which led to the conviction of the respondent accused. Thus there was adjudication of liability of the respondent accused. While the appeal was pending, the matter was settled in the Lok Adalat in acknowledgment of liability of the accused respondent to the appellant complainant - The cheque issued pursuant to the order of the Lok Adalat, was also dishonoured. This clearly gave rise to afresh cause of action under Section 138 of the Negotiable Instruments Act. Every award of the Lok Adalat is, as held in K.N. Govindan Kutty Menon's case [ 2011 (11) TMI 783 - SUPREME COURT ], deemed to be decree of a civil court and executable as a legally enforceable debt. The dishonour of the cheque gave rise to a cause of action under Section 138 of the Negotiable Instruments Act. The impugned judgment and order is misconceived. Appeal allowed - decided in favor of appellant.
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