Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 15, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Attachment of bank account - In the light of the mandate contained in Section 83, either the respondents should initiate proceedings by issuing a show cause notice forthwith or should proceed to lift the attachment in question, also forthwith.
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Appeal against the order of first appellate authority - non constitution of GST Tribunal - Due to non constitution of the GST Tribunal, number of writ petitions are being filed in the High Court thereby further burdening the Court.
Income Tax
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Depreciation claim on its commercial vehicle - The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery.
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Un-explained cash credit u/s. 68 - AO directed to treat all the unexplained cash credits also as the business turnover of the assessee and estimate the income thereon at the same rate at which the disclosed income is brought to tax.
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Rental income received by the appellant from sub-letting of the "Kantilal House" premises to Bank of Baroda - taxable either u/s.22 or u/s.56 - for the purpose of Sec. 27(iiib) r.w.s. 269UA(f)(i), the assessee was deemed owner of the property and therefore, the stated income was rightly brought to tax by revenue authorities as Income from House Property
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Upto and until, the issue regarding determination of the taxable income is finalized, penalty u/s 271(1)(c) of the Act cannot be imposed upon the assessee. Once we have set aside the quantum proceedings, then very basis to compute penalty gets extinguished.
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Demand raised u/s 200A - demand raised by way of fee u/s 234E for belated filing of Statement of TDS - we condone the delay that occurred between the date of intimation u/s 200A and the date of downloading of “Default Summary”. Accordingly, the assessee should have filed appeal from 30 days of date of downloading of “Default Summary”.
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Addition On Protective Basis in the hands of the appellant - CIT(A) is not justified in sustaining the protective addition merely on the reason that the assessee has not provided the status of finality of addition in the hands of another person.
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Bogus LTCG - addition u/s 68 - the assessee is a habitual investor having portfolio of investment in shares in crores and is still holding investment in shares in several crores and is constantly engaged in investing in shares of various companies - assessee has successfully discharged the onus cast upon him by provisions of section 68 - Additions deleted.
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Genuineness of the donation for a charitable activity - assessee has lent its hands by giving donation of ₹ 7 lakhs - when the genuineness of the donation for a charitable activity could not be controverted by AO then the amount used as application of the income of the assessee is definitely an allowable expenditure.
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Exemption u/s 11 - Accumulation of income - whether 15% accumulation for application in future has to be calculated on gross receipt or net receipt after deduction of revenue expenditure - accumulation u/s. 11(1)(a) should be allowed as claimed by the assessee
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Nature of expenditure - current repairs - cost of replacement of machineries like Motor Rollers, Spindles, Gears etc. in the Textile Mill - the replacement of the machineries as a whole by the Assessee cannot be held to be current repairs or allowable revenue expenditure
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TDS at lower rate u/s 197 - effective date of certificate - withholding tax certificate issued to the petitioner has been made effective from the date of issue OR from the beginning of the financial year i.e. 01.04.2019 - interim relief granted.
Customs
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Misdeclaration of imported goods - the goods in question cannot be termed as ‘prohibited goods’ merely for misdeclaration in the Bills of Entry, for the purpose of imposing penalty u/s 112 - the Customs Duty sought to be evaded is nowhere quantified - Maximum penalty is ₹ 5000
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Under-valuation of imported goods - Ball Valves and Bibcock - the price quoted in a proforma invoice cannot be held as the actual prices since the price of goods are settled after negotiation between the two parties - The revenue has not produced any document to prove that there was any extra payment made by the appellant towards purchase of the said goods.
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Revocation of CHA License - no physical interaction with the exporter was made - The revocation of the license of CHA is disproportionate of the offence committed by them under the various provisions of CBLR 2013 as amended. So is the case of forfeiture of the Security Deposit
IBC
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Service of notice - initiation of CIRP - in the present case, the Bill / Invoice was raised against, M/s Flywheel Logistics Private Limited, whereas the mandatory demand notice under Section 8 of the 'IBC' has been served against the 'Flywheel Logistics Solutions Pvt. Ltd.' - The demand notice issued against the 'Corporate Debtor' is not a valid notice U/S 8 of the Code
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Initiation of CIRP - In view of the fact that there was a pre-existence of dispute and parties have settled the matter before the constitution of the 'Committee of Creditors', the 'Corporate Debtor' (company) is released from all the rigours of law and is allowed to function independently through its Board of Directors from immediate effect.
Service Tax
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Rectification of mistake - furnishing of copy of the multimodal certificate issued by the Director-General of Shipping - Merely because renewal certificate for the earlier period was not produced earlier cannot mean that the order cannot be rectified under section 74 of the Finance Act, 1994.
Central Excise
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Rebate claim - export of final products from the factory - process amounting to manufacture or not - Manufacture on job work basis - assembly - the activities undertaken by the appellant amounted to ‘manufacture’ of excisable goods - Benefit of cenvat credit and rebate allowed.
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Forfeiture of amount deposited in the Escrow account - Since the benefit of exemption has been denied and the assessee has duly made the payment by utilization of credit as also accepted by the department, the payment of amount by challan has to be at best considered as ‘deposit’ which cannot be retained by the department and is liable to be refunded back.
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Concessional rate of duty - supply of Aviation Turbine Fuel (ATF) falling under Chapter 2710.90 of the First Schedule to Central Excise Tariff to Aircraft operating through Kolkata Airport both on domestic and foreign run - the aircraft touches two Indian ports and change in the flight numbers - the appellant cannot be deprived of the benefits extended in the notification
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CENVAT Credit on capital goods - there is no time limit is stipulated under the Cenvat Scheme, for taking credit on capital goods, since as per the scheme, the balance credit can be deferred by an assessee to be taken in any financial year or years, subsequent to the financial year in which the capital goods were received.
VAT
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Levy of purchase tax - valuation - The Tribunal is justified in imposing the purchase tax on the Assessee Sugar Mill on the entire purchase price including the components of price for the sugar cane, plantation subsidy and transportation charges paid by the Assessee for transportation of sugar cane from the sugarcane fields to the factory premises of the Petitioner
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Jurisdiction - powers to the authorities under TN VAT to summon documents and witnesses - Misuse of IEC Code - To know the actual importer - The TAN VAT Act gave ample powers to the authorities to summon documents and witnesses and to call for information from the other Departments under Sections 81 and 82 of the Act. Similar provisions are there in the newly enacted GST Acts
Case Laws:
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GST
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2020 (1) TMI 521
Admissibility of application - Whether N/N. 31/2017, dated 13th Oct., 2017 is applicable on them? - HELD THAT:- The application shall not be admitted as per the provisions of Section 98(2) of CGST Act, 2017, as the question raised in the application is already pending with the State Tax authorities, Aligarh.
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2020 (1) TMI 516
Detention of seized goods and conveyance - Section 129(3) of CGST Act - HELD THAT:- The goods are in the nature of electrical goods. It appears that a notice under Section 129(3) of the Act i.e. GST MOV-07 came to be issued calling upon the writ-applicant to appear before the authority concerned on 31st December 2019. The legal issues, which have been raised by the learned counsel appearing for the writ-applicant shall be heard and decided on the returnable date. However, we are inclined to pass an interim order for the release of the goods and the vehicles - We direct the writ-applicant to deposit an amount of ₹ 50,40,972/- towards the tax with the respondent no.2 and the balance amount of ₹ 50,40,972/towards the penalty shall be in the form of a bank guarantee of any nationalized bank.
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2020 (1) TMI 515
Maintainability of appeal - pre-condition for filing the appeal - HELD THAT:- While filing first appeal, the petitioner had deposited 10% of the disputed amount of tax as a pre-condition for filing the appeal - In respect of the remaining amount, he had furnished security. The petition is entertained.
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2020 (1) TMI 514
Release of detained goods alongwith vehicle - principles of natural justice - recall of order passed under Section 130 of the Act - HELD THAT:- The goods and the conveyance came to be detained and seized way back on 19th July, 2019. Till this date, the goods and the conveyance is in the possession of the GST Authorities - As we are directing the authorities to initiate fresh proceedings with regard to confiscation, we direct the writ applicants to deposit an amount of ₹ 4,02,500/- towards the tax and penalty as determined under Section 129 of the Act - On deposit of such amount, the goods and the conveyance shall be released forthwith subject to the final outcome of the confiscation proceedings. The amount of ₹ 4,02,500/- towards the tax and penalty has been determined while passing the order of confiscation under Section 130. Let this amount be deposited by the writ applicants, and subject to deposit, there shall be release of the goods and the conveyance - Application disposed off.
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2020 (1) TMI 513
Appeal against the order of first appellate authority - non constitution of GST Tribunal - validity of orders passed by the appellate authority under Section 107 of the U.P. Goods and Service Tax Act, 2017 - HELD THAT:- It is an admitted position that all the orders which have been passed under the GST Act by the appellate authority concerned are appealable under Section 112 of the GST Act before the Goods and Service Tax Tribunal - It is needless to say that GST Tribunal has been provided for under Section 109 of the GST Act, giving forum to the aggrieved persons to seek redressal of their grievance before the GST Tribunal against the orders passed by the first appellate authority. The GST Act came into force on 01.07.2017 and even after expiry of more than two and half years, it is very surprising and anguishing to note that till date benches of GST Tribunal have not been constituted in the State of U.P. despite various observations/directions made by this Court by means of interim orders and final judgments passed by this Court at Allahabad and Lucknow. Due to non constitution of the GST Tribunal, number of writ petitions are being filed in the High Court thereby further burdening the Court. This Court has no option but to issue direction for personal appearance of competent authority before the Court. Therefore, officer of the Government of India not below the rank of Additional Secretary, Ministry of Finance, Government of India, New Delhi shall appear before this Court on 16.01.2020 for assistance, on which date the Officer is required to inform the Court as by which date the GST Tribunal would be constituted in the State of U.P. Let the bunch of cases be listed on 16.01.2020.
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2020 (1) TMI 509
Attachment of bank account - Rule 159(1) of the of the Goods and Service Tax Rules, 2017 - attachment on the ground that proceedings had been launched against it in terms of Section 67(2) of the CGST Act to determine the tax or any other amount that may be due from it - HELD THAT:- The provisions of Section 83 mandate that the attachment of bank account be only during the pendency of proceedings in terms of Section 62/63/64/67/73/74 of the Act. In the counter filed by the respondents, they confirm at paragraph 5(ii), that the proceedings contemplated at the moment are in terms of Section 74. Having stated so as early as in June 2019, no action has been taken till date by issuance of show cause notice. In the light of the mandate contained in Section 83, either the respondents should initiate proceedings by issuing a show cause notice forthwith or should proceed to lift the attachment in question, also forthwith. The petitioner will appear before the respondent on 21.01.2020 and co-operate in the completion of verification process to enable immediate issuance of show cause notice. The show cause notice shall be issued within a period of two weeks, from 21.01.2020, i.e., on or before 04.02.2020 - Petition disposed.
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2020 (1) TMI 502
Filing of form GST TRAN-1 - HELD THAT:- The respondents shall permit the petitioner to submit online GST TRAN-1 form, subject to furnishing a proof that he had tried to upload GST TRAN-1 form prior to 27.12.2017 and such attempt failed due to technical fault/glitch on the common portal. The petitioner may submit an application before the GST Council to issue the requisite certificate/recommendation, alongwith requisite particulars, evidence and a certified copy of the order instant, within a period of 15 days from today. If the petitioner s assertion is found correct, the GST Council shall issue the recommendation/certificate to the petitioner within a period of three weeks from placement of such application and certified copy of this order. In case the GST Council is of the view that petitioner is not entitled for certificate/ recommendation, they shall pass an order giving brief reasons and communicate the same to the petitioner assessee. Application disposed off.
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Income Tax
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2020 (1) TMI 520
Additions u/s 68 - allotment of share capital - as stated that when liability has been created equal to amount of assets transferred and shares allotted in settlement of this liability, there can be no addition under Section 68 of the said Act as unexplained cash credit - tribunal further held that, value of shares allotted to individuals would amount to unexplained cash credit - HELD THAT:- No reason to interfere with the impugned judgment and order. The Special Leave Petition is dismissed.
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2020 (1) TMI 518
Validity of Reopening of assessment u/s 147 - tribunal held that the notice issued u/s 148 was not valid on ground that AO has not demonstrated the failure of the assessee in disclosing the material fact also confirmed by HC - HELD THAT:- No reason to interfere in the matter. The special leave petition is, accordingly, dismissed.
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2020 (1) TMI 517
Assessment u/s 153A - allegation of generation of unaccounted money and also transfer of such money in exchange of share capital - proving any accommodation entry - reliance on third party statement - CIT(A) and ITAT deleted the additions - HELD THAT:- No reason to interfere in the matter. The special leave petition is, accordingly, dismissed.
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2020 (1) TMI 511
TDS at lower rate u/s 197 - effective date of certificate - withholding tax certificate issued to the petitioner has been made effective from the date of issue OR from the beginning of the financial year i.e. 01.04.2019 - HELD THAT:- The petitioner has placed on record the lower withholding tax certificate issued in respect of the financial year 2018-19. We find that the parties to whom the lower withholding tax certificates were issued for the financial year 2018-19 are the same. In a matter like the present one, time is of the essence since the petitioner is being subjected to higher deduction of tax at source by the parties which are transacting in business, while its claim is for lower withholding tax. The petitioner is a well established business enterprise. Though, the lower withholding tax certificates have been issued in respect of all the parties, the dispute remains with regard to the date from which the certificates should take effect since the petitioner claims that it had made the application on 18.03.2019 for the financial year 2019-20. In respect of all the parties, we are inclined to direct as an interim measure that the said certificates issued to the petitioner would be effective for the entire financial year of 2019-20, subject to further orders.
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2020 (1) TMI 507
Nature of expenditure - current repairs - cost of replacement of machineries like Motor Rollers, Spindles, Gears etc. in the Textile Mill of the Assessee - revenue expenses or capital expenses - HELD THAT:- The total replacement cost of three machineries in question purchased by the Assessee came to be allowed by the Tribunal as 'repairs maintenance expenditure' or 'revenue expenditure'. The said findings of the learned Tribunal are clearly contrary to the decision of the Hon'ble Supreme Court Sarangpur Cotton Mfg. Co. Ltd. [2017 (4) TMI 301 - SUPREME COURT ] and therefore, the view of the Tribunal cannot be sustained and the replacement of the machineries as a whole by the Assessee cannot be held to be current repairs or allowable revenue expenditure. Therefore, respectfully following the binding precedent of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Gujarat V. Sarangpur Cotton Mfg. Co. Ltd. [2017 (4) TMI 301 - SUPREME COURT ] the present Appeals filed by the Revenue deserves to be allowed and the substantial question of law framed is answered in favour of the Revenue and against the Assessee
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2020 (1) TMI 501
Exemption u/s 11 - Accumulation of income - Net income determination of assessee trust - AO allowing deduction of 15% on the net income after deduction of administrative expenses - assessee is enjoying registration u/s. 12A - whether 15% accumulation for application in future has to be calculated on gross receipt or net receipt after deduction of revenue expenditure - assessee claimed accumulation of income for application for charitable purpose at 15% of the gross receipts - HELD THAT:- Respectfully following the aforesaid Tribunal s decision in Bhagwan Mahaveer Memorial Jain Educational Cultural Trust [ 2019 (8) TMI 1194 - ITAT BANGALORE] hold that the accumulation u/s. 11(1)(a) of the Act should be allowed as claimed by the assessee. This ground of appeal of assessee is allowed. Disallowance u/s. 69C - Application of income for purchase of blankets as bogus - HELD THAT:- We find force in the contention of the assessee that neither the statement of shri S L Dugar was recorded in the presence of the assessee nor opportunity to cross-examine shri Dugar was provided to the assessee by the AO. The AO ought to have given a copy of the statement recorded by him and provided adequate opportunity to the assessee to cross-examine the maker of the statement if it is adverse against him. However, it is noted that Shri S. L. Dugar became a director only on 01.02.2016 of the 2 companies from which assessee purchased blankets and distributed the same, and the assessment under consideration is AY 2013-14. So, the AO when verifing the facts of this AY 2013-14, ought to have summoned the director/manager of this AY 2013-14, who would be in a better position to throw light on the facts which he was enquiring. So, I set aside the impugned order of Ld. CIT(A) and remand this issue back to the file of AO to de novo adjudicate/assess the issue and give proper opportunity to cross-examine the concerned director/manager of three companies, if the AO is relying on their statement. Genuineness of the donation for a charitable activity - HELD THAT:- The competent authority in the year 1974 has been pleased to grant the 12A registration. Among the objectives narrated above, it is noted that assessee is engaged for promoting education and for providing marriage expenses for the girls of the needy poor families and also for giving Sadabrat to the poor and giving donation to the poors and for establishing, takeover, grant, maintain, assistance, support, hospitals, charitable dispensaries, maternity homes etc. Here, we note that the assessee had given by way of donation to Lohia Matri Seva Sadan Maternity Charitable Organisation which is established for taking care of the pregnant women/ladies. Taking care of the poor ladies who are in labour and for running maternity ward for the poor women is a charitable activity and for which the assessee has lent its hands by giving donation of ₹ 7 lakhs and the evidence for giving donation has been filed along with supporting documents viz., bank statement etc. So, when the genuineness of the donation for a charitable activity could not be controverted by AO then the amount used as application of the income of the assessee is definitely an allowable expenditure. This ground of appeal of assessee is allowed.
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2020 (1) TMI 500
Depreciation claim on its commercial vehicle - @ 30% on hire and other vehicles which stood restricted to 15% only during the course of assessment - HELD THAT:- As decided in own case [ 2019 (3) TMI 1702 - ITAT KOLKATA] A.O. could not bring any material on record, to dispute the assessee s claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. A.O s contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision of the Punjab Haryana High Court in the case of CIT vs. Rakesh Jain [ 2012 (5) TMI 7 - PUNJAB HARYANA HIGH COURT] . Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition made by AO, on account of additional depreciation claim on higher rate, should be deleted. - Decided in favour of assessee Deemed dividend u/s.2(22)(e) - appellant company has received the loan of ₹ 29977000/- from Capital Tours India Pvt. Ltd. wherein also holds more than 25% of the shares in Capital Tours India Pvt. Ltd. - HELD THAT:- DR ails to rebut the clinching fact that the assessee has paid interest @ 9% to M/s Capital Tours India Pvt. Ltd., in commercial terms. This tribunal s co-ordinate bench s order in Smt. Sangita Jain vs. Income Tax Officer Ward-36(3) Kolkata [ 2016 (3) TMI 1202 - ITAT KOLKATA] holds that such an instance of commercial loans does not attract sec. 2(22)(e) - Decided against revenue Sundry balances written off / puja expenses addition - HELD THAT:- Assessee had originally claimed puja expenses only which stood treated as sundry balances written off. Be that as it may, there can hardly be any dispute that puja expense as incurred wholly and exclusively for the purpose of business since they relate to assessee s business sites in civil construction business. We further notice that the CIT(A) has rightly placed reliance on hon'ble apex court s decision in T.R.F. Ltd. vs. Commissioner of Income Tax [ 2010 (2) TMI 211 - SUPREME COURT] to hold that it is no more necessary as per the amended statutory provision w.e.f 01.04.1989 to prove that the corresponding sums have become actually irrecoverable. We thus conclude that the CIT(A) has rightly reversed the assessment findings on these twin counts of puja as well as sundry balance. The Revenue fails in its third substantive grievance as well. Disallowance u/s 14A qua exempt dividend income - HELD THAT:- We notice that the Assessing Officer had invoked Rule 8D (2)(ii) disallowance of IT Rules, 1962 to disallow the impugned proportionate interest expenditure which stand restricted to the extent of dividend income only in lower appellate proceedings. Hon'ble Delhi high court s decision in Joint Investment Ltd. vs. Commissioner of Income Tax [ 2015 (3) TMI 155 - DELHI HIGH COURT] holds that such a disallowance cannot exceed the exempt income amount itself. We thus uphold the CIT(A) a findings qua this last issue as well
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2020 (1) TMI 499
Bogus LTCG - addition u/s 68 - alleged suspicious sale transactions in shares of LDPL, which generated exempted long term capital gains to the assessee - HELD THAT:- Either the assessee entered into solitary transaction resulting into long term capital gain or prior to the solitary transaction, the assessee was neither engaged in the purchase and sale of shares nor subsequent to earning of long term capital gain, the assessee was found to be engaged in the purchase and sale of shares. These facts are clearly distinguishable from the facts of the case in hand. As mentioned elsewhere, the assessee is a habitual investor having portfolio of investment in shares in crores and is still holding investment in shares in several crores and is constantly engaged in investing in shares of various companies. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and as mentioned elsewhere, such discharge is purely a question of fact. We, accordingly, direct the Assessing Officer to accept the long term capital gain declared as such. - Decided in favour of assessee.
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2020 (1) TMI 498
Addition On Protective Basis in the hands of the appellant - addition in respect of cash of ₹ 1.30 crores seized from assessee - whether the same addition can be retained in the hands of two assessees, in one on substantive and other on protective basis? - HELD THAT:- We find that CBDT in order dated 20-12-1971 has authorized the Departmental Authorities to cancel the protective assessment where the substantive assessment had attained finality. Departmental Authorities are bound by the Circulars issued by the CBDT, and should take action in the hands of the assessee after verifying the facts in respect of the status of the addition in the hands of Sh. Rajiv Gulati. CIT(A) is not justified in sustaining the protective addition merely on the reason that the assessee has not provided the status of finality of addition in the hands of Sh. Rajiv Gulati. CIT(A) had access to the records of the department and could have ascertained the status of finality of addition. In our opinion, retaining the addition by the First Appellate Authority, in both substantive in the case of one assessee and protective in the hands of another assessee, is not justified. Set aside order of the ld. CIT(A) and restore the matter back to the ld. CIT(A) for deciding afresh in accordance with law after verifying the records that Sh. Rajiv Gulati has finally accepted addition of ₹ 1.3 Crore in his hand. - Appeal of the assessee allowed for the statistical purposes.
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2020 (1) TMI 497
Condonation of delay - Demand raised u/s 200A - demand raised by way of fee u/s 234E for belated filing of Statement of TDS - CIT(A) in rejecting the appeals in limine as non-maintainable and defective - non cognizance of the default summary furnished by the assessee - CIT(A) has dismissed the appeals for the reason that the assessee did not enclose the copies of intimations issued u/s 200A - HELD THAT:- When the demand mentioned in the Default Summary is correct and further the demand raised u /s 234E is machine computed demand, in our view, no useful purpose will be served in insisting upon the copies of intimations, since the said intimations also would show the very same demand raised u/s 234E of the Act. Accordingly, we are of the view that the Ld CIT(A) should have proceeded to dispose of the appeals by taking cognizance of the default summary furnished by the assessee along with the return of income. Even though we have stated that the Default summary may be taken as the document depicting the demand, yet we have been informed by Ld D.R that the assessee could download the copies of intimations from the Income tax Site. Accordingly, we direct the assessee to download copies of intimations and if it is not able to download so, it may seek the assistance of the concerned authorities of Income tax department for downloading the intimations and after the copies of intimations are downloaded, they may be filed with Ld CIT(A). Accordingly we condone the delay that occurred between the date of intimation u/s 200A and the date of downloading of Default Summary . Accordingly, the assessee should have filed appeal from 30 days of date of downloading of Default Summary . The assessee may verify the same and if there is any delay, in the interest of natural justice, we allow an opportunity to explain the delay, if any, before Ld CIT(A), which shall be examined by Ld CIT(A) in accordance with law. CIT(A) has not adjudicated the appeals on merits. If there is delay in filing appeals after downloading of Default summary , the said delay also needs to be examined by Ld CIT(A). Accordingly, we are of the view that all the appeals under consideration are required to be set aside to the file of Ld CIT(A). appeals of the assessee are treated as allowed for statistical purposes.
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2020 (1) TMI 496
Rectification of mistake - mistake apparent from record - Addition u/s 68 - Unconfirmed creditors - as per ITAT an opportunity was provided to the assessee during the appellate proceedings and remand proceedings to prove the credit balances, yet the assessee could not produce any documents or confirmation from the creditors,thus confirmed addition - HELD THAT:- It can be noticed that the Tribunal has taken a view in this matter after appreciating the orders passed by the tax authorities and considering the documents furnished by the assessee. Hence it cannot fall in the category of mistake apparent from record , as contended by the assessee. Accordingly, we do not find any merit in the petition filed by the assessee and accordingly dismiss the same. - Decided against assessee.
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2020 (1) TMI 495
Addition made u/s 68 - Addition on account of bogus purchases on fixed assets - assessee could not justify the genuineness of the cash credits nor could furnish any evidences in support of its claim of purchases of its assets - HELD THAT:- Since the fixed assets were treated as bogus, denial of depreciation was also confirmed. As carefully perused the findings of the ld. CIT(A). As mentioned elsewhere, none appeared on behalf of the assessee. Since nothing has been provided to us by the assessee, we decline to interfere with the findings of the ld. CIT(A). Grounds raised by the assessee stand dismissed. Bogus claim of depreciation - HELD THAT:- Since in A.Y 2010-11 [supra] we have treated the entire purchases of fixed assets as bogus, there is no question of any allowance of depreciation. In respect of other assets, we find that no supporting evidences have been furnished and, therefore, denial of depreciation is justified. Claim of expenditure - onus is upon the assessee to furnish necessary evidences in support of its claim of expenditure. Since no documentary evidences have been furnished, the addition on account of non availability of bills in respect of expenses is confirmed. Accordingly, all the Grounds raised by the assessee stand dismissed.
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2020 (1) TMI 494
Validity of reassessment proceedings u/s 147 - assessment was sought to be reopened after expiry of four years from the end of the relevant assessment year - HELD THAT:- From the perusal of the assessment order, it is clear that the Assessing Officer had not made reference to any tangible material nor which has come to his notice after completion of original assessment which enable the Assessing Officer to form an opinion that income escaped assessment. Therefore, it can be safely concluded that reassessment proceedings was initiated based on materials already available on record. It is a case of mere change of opinion on the same set of information/material. The other requisite condition to be satisfied in case where the reopening is sought after expiry of four years from the end of the relevant assessment year is that there should be failure on the part of the assessee to disclose all material facts which are necessary for the purpose of assessment. In the present case, admittedly, there is no allegation by the Assessing Officer that there is any such failure on the part of the assessee. Therefore, we are of the considered opinion that Assessing Officer was not justified in initiating reassessment proceedings. See M/S. SCHWING STETTER INDIA P. LTD. [ 2015 (6) TMI 497 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2020 (1) TMI 493
Order of CIT(A) is non-speaking and did not adjudicate points raised by the assessee - whether the income from the hospital income is to be assessed as income from other sources or as house property income AND Whether the loss under the head income from other sources can be set off against the salary income? - CIT(A) has dismissed the appeal of the assessee - HELD THAT:- Sub-section (6) of section 250 of the Income Tax Act, 1961 mandates the ld.CIT(A) to state point in dispute, and thereafter record reasons in support of his conclusion. A perusal of the above finding would indicate that it is not in consonance with mandate given in the Act. CIT(A)has not made any analysis of submissions filed by the assessee as well as point raised by him during the assessment proceedings. Therefore, the impugned order is not sustainable; it deserves to b e set aside. However, before setting aside the impugned order, and remitting the issue to the file of the ld.CIT(A), we would like to appraise ourselves with observation of Roadmaster Inds. Of India P.Ltd. Vs. IAC [ 2006 (5) TMI 86 - PUNJAB AND HARYANA HIGH COURT] as held order passed by the CIT does not satisfy the prerequisites of a speaking order, as the same does not contain reasons to support the order. Penalty u/s 271(1)(c)(iii) - mechanism for quantification of penalty - HELD THAT:- assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the additions made to the income of the assessee. Upto and until, the issue regarding determination of the taxable income is finalized, penalty under section 271(1)(c) of the Act cannot be imposed upon the assessee. Once we have set aside the quantum proceedings, then very basis to compute penalty gets extinguished. Therefore, we set aside the penalty order passed by the AO as well as by the ld.CIT(A). This issue is also required to be adjudicated on the basis of outcome of quantum proceedings.
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2020 (1) TMI 492
Penalty u/s 271(1)(c) - AO has not struck off inapplicable charge/limb - HELD THAT:- It is now well settled proposition of law that the expressions concealment of particulars of income and furnishing of inaccurate particulars of income connote different meanings. This legal position has been explained by Hon ble Supreme Court in the case of Dilip N Shroff [ 2007 (5) TMI 198 - SUPREME COURT] which has been reproduced by Hon ble Supreme Court in the case of T. Ashok Pai vs. CIT [ 2007 (5) TMI 199 - SUPREME COURT] In the instant case, we have noticed that the assessing officer was not clear on the charge/limb he wanted to invoke in respect of disallowance made by him while computing book profit. In the assessment order, he has not referred to any of the link. In the penalty order, the AO states initially that it is a case of concealment of income, but proceeds to levy penalty for concealment of income and furnishing of inaccurate particulars of income. As per the decision rendered by Hon ble Supreme Court in the case of Dilip N Shroff (supra), the addition may fall under any of the two limbs. We notice that the assessee has fully disclosed all the particulars relating to waiver benefits in its return of income. Hence it cannot certainly a case of furnishing of inaccurate particulars of income at all. All these factors would show that the AO was not clear as to charge for which he has initiated penalty proceedings. In any case, we have noticed that the AO has also not struck off inapplicable limb in the penalty notice, which further fortifies the case that the assessing officer has not applied his mind. Hence, as per the decision rendered by Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] the penalty order is liable to be quashed.
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2020 (1) TMI 491
Rental income received by the appellant from sub-letting of the Kantilal House premises to Bank of Baroda - taxable either u/s.22 or u/s.56 - onus to prove - Income from house property or income from other sources - long-term lease - Whether appellant is a deemed owner of the aforesaid premises u/s.27(iiib) read with Section 269UA(f)(i) of the Act, and is not a 'monthly tenant' as claimed by the appellant - computing the period of twelve years - order passed by CIT (Appeals) u/s 250 holding that the appellant is a deemed owner of the aforesaid premises - HELD THAT:- Assessee was in occupation of Kantilal House since the year 1948 and continues to do so even today which prima-facie would establish that the premise was taken under long-term lease. In the absence of any written contract, the submissions that tenancy was on month to month basis would require higher degree of evidence. The entire onus was placed on assessee to prove the same by clinching evidences in the background of the fact that the assessee entered into long term lease agreement extending beyond a period of 12 years with Bank of Baroda. It was also observed that when the assessee was not sure of the period of tenancy, then how could it enter into a lease agreement with a nationalized bank for a period of 12 or more years. Heavy onus was casted upon assessee to prove that he was tenant on monthly basis as covered by exception provided u/s 27(iiib) and the lease was not a period exceeding 12 years to attract the provisions of Section 269UA(f). We find that except for letter from legal heirs of the deceased landlord which merely stated that the assessee has paid monthly rents, no other evidence could be adduced by the assessee to substantiate the fact that tenancy was on month to month basis despite being specifically directed by the Tribunal to do so. In such eventuality, the only documents that would be available to adjudge the assessee s claim would be in the shape of lease agreements entered into by the assessee with Bank of Baroda - despite assertions by the assessee that tenancy was on month to month basis and the same could be terminated by tendering 15 days notice, the assessee conveniently entered into long-term lease agreement for aggregate period exceeding 12 years and that too with a Nationalized Bank, who require approval of regulatory authorities to open /operate the branches - setting up of branch would entail heavy infrastructure cost for the Bank. In the said background, it is difficult to acquiesce to the fact that Bank would agree to enter into such long-term lease agreement for as many as 12 years despite being fully aware of the fact that the tenancy was on month to month basis and the premise could be got vacated by landlord by giving a very short notice. The same would not be possible unless there is assurance of high degree of successful performance of the lease agreement. Bank was assured of peaceful enjoyment of the said premise for the agreed period of lease without any interruptions. Hence, the entire facts and circumstances do not convince us to accept the argument that the tenancy was on month to month basis and the assessee was covered in the exceptions contained in Sec. 27(iiib). We rely on the decision of Hon ble Supreme Court rendered in CIT V/s Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] wherein it was observed that the authorities were entitled to took into the surrounding circumstances to find out the realities of the recitals made in the documents. Keeping in view the entirety of facts and circumstances, we hold that the tenancy was not on month to month basis as asserted by the assessee but it was for aggregate period exceeding 12 years in terms of Sec. 269UA(f)(i). Accordingly, for the purpose of Sec. 27(iiib) r.w.s. 269UA(f)(i), the assessee was deemed owner of the property and therefore, the stated income was rightly brought to tax by revenue authorities as Income from House Property. In view of the same, the questions whether the income could be assessed as income from other sources would be tendered academic in nature. Finally, by concurring with the stand of lower authorities, we dismiss the appeal of assessee.
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2020 (1) TMI 490
Disallowance u/s 14A - investment made out of own funds - HELD THAT:- We note that where the assessee was having a common fund consisting of both own funds and borrowed funds and in case the own funds are sufficient to invest in non-business activities, a presumption is drawn that the said investment is made out of own funds. We note that in the assessee`s case under consideration, the assessment year involved is A.Y.2008-09 hence, Rule 8D of the Income Tax Rules read with section 14A of the Act are applicable to the assessee and the AO may compute the disallowance by applying Rule 8D of the Income tax Rules. So far Rule 8D(2)(i) is concerned, the assessee has not disallowed suo-moto any amount, therefore no any addition under this Rule can be made by assessing officer. Coming to Rule 8D(2) (ii) of the Rules,the own funds of the assessee is far more than the investments and hence it can be safely presumed that the investments were made only out of own funds. Therefore, the AO is directed to delete the addition under rule 8D(2) (ii) of the Rules. Coming to Rule 8D(2) (iii) of the Rules, we note that addition may be made @ 0.50% of the dividend bearing securities as per the law laid down by the Coordinate Bench in the case of REI Agro Ltd [ 2013 (9) TMI 156 - ITAT KOLKATA] disallowance in such respect should be restricted to the amount only to the extent of the exempt income following the principles decided on the aforesaid matters by various Hon`ble High Courts. Therefore, we restrict the disallowance to ₹ 23,35,776/-, being amount of exempt dividend income earned during the year and hence we direct the AO for both the assessment years, that is A.Y.2008-09 and A.Y.2011-12 to restrict the disallowance to the extent of exempt dividend income earned during the year. Therefore, we dismiss the appeals filed by the Revenue as well as appeals filed by the assessee. Disallowance of provision for Non- Performing Assets (NPA) - HELD THAT:- We agree with the view taken by the Coordinate Bench in it s earlier order [ 2019 (2) TMI 1721 - ITAT KOLKATA] . Thus, the issue is squarely covered against the assessee by the decision of Apex Court in Southern Technologies Ltd. [ 2010 (1) TMI 5 - SUPREME COURT] . Respectfully, following the decision of Apex Court in Southern Technologies Ltd. (Supra), we dismiss the ground raised by the assessee. Provision for leave Encashment in the computation of total income under the normal provisions of the Act - HELD THAT:- We find that though the Hon ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] had struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon ble Supreme Court [ 2008 (9) TMI 921 - SC ORDER] - Hence from the aforesaid Supreme Court judgement, it could be inferred that the Hon ble Supreme Court had not stayed the judgement of the Calcutta High Court during Leave proceedings. But the Hon ble Supreme Court had only passed an interim order on the impugned issue. Hence we deem it fit and appropriate , in the interest of justice and fair play, to remand this issue to the file of the ld AO to pass orders based on the outcome of the main appeal on merits Addition of profit on sale of fixed assets/investments in computing Book Profits under section 115JB - HELD THAT:- As the issue is squarely covered in favour of the revenue by the decision of Special Bench in case of Rain Commodities [ 2010 (7) TMI 794 - ITAT HYDERABAD] wherein held in the absence of any provision for exclusion of exempted capital gain in the computation of book profit u/s 115JB, the assessee is not entitled to the exclusion claimed and there is no change in facts and law and the ld Counsel is unable to produce any material to controvert the above said findings of the special Bench. Therefore, respectfully following the decision of Special Bench (supra) we dismiss the ground of appeal raised by the assessee. Addition of provision for non-performing assets (NPA) of ₹ 13,71,00,000/- in computing the book profit under section 115JB - HELD THAT:- We note that provision for NPA is made as per Direction 9 of RBI prudential norms and disclosed separately as liabilities in the balance sheet as per Direction 10 of the said prudential norms. The Non- Performing Assets, against which the provision is made remains intact without any reduction. Based on the above factual and legal position, we are of the view that provision for Non-performing assets cannot be said to be provision for diminution in value of assets to attract disallowance as per clause (i) of Explanation 1 to sec. 115JB(2) of the Act. In other words, by making a provision for NPA, there will be no reduction in NPA. Hence, clause (i) of Explanation to Sec. 115JB(2) does not apply since there is no reduction in value of asset. Accordingly, this ground of the assessee is allowed and Assessing Officer is directed to delete addition made in computing book profit u/s 115JB of the Act. These grounds of assessee are allowed. Education Cess as an allowable expenditure u/s 37(1) - HELD THAT:- We accept the submissions of the assessee concurring with the decisions of Rajasthan High Court M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and binding favourable decisions of Jurisdictional Tribunal and thus we allow the claim of the education cess. The AO is directed to allow the claim of education cess in computing total income of the assessee company. MAT Applicability - whether Assessee company prepares books of accounts as per RBI Rules. Section 115JB of the Act is not applicable to the assessee company, as it does not prepare books of accounts as per part II and part III of Schedule VI of the Companies Act,1956? - HELD THAT:- . Even though the assessee has prepared its accounts following the RBI guidelines and the accounts so prepared is strictly not in accordance with provisions of Part II Part III of Schedule VI of the Companies Act, 1956, yet it cannot be said that provisions of Sec 115JB would not be applicable to the assessee company. The assessee company has incorporated under the Companies Act and prepared its accounts in accordance with provisions of Part II Part III of Schedule VI of the Companies Act, 1956. Since there is no such observations by the Auditors also in their Audit Report, we do not agree with ld AR for the assessee and therefore, we confirm the earlier order passed by this Tribunal dated 27-02-2019. Accordingly, this ground of the assessee is dismissed as devoid of merit. Amount transferred to Special Reserve in compliance with the provisions of Section 45IC of the Reserve Bank of India Act, 1934 to be excluded in computing total income under the normal provisions of the Act - HELD THAT:- A transfer to a specific reserve cannot be charge on profit. It is not expenditure. It is appropriation of profit. Respectfully following the Judgment of the Hon ble Delhi High Court [ 2015 (2) TMI 545 - DELHI HIGH COURT] in assessee`s own case, we dismiss the ground raised by the assessee. Addition on account of the amount transferred to special reserve , (out of statutory compulsion in accordance with section 45-IC of RBI Act) while computing book profit u/s 115JB - HELD THAT:- Tribunal in its earlier order [ 2019 (2) TMI 1721 - ITAT KOLKATA] had disallowed the ground relying on the decision of Delhi High Court in assessee s own case for A.Y 2006-07 2007-0 [ 2015 (2) TMI 545 - DELHI HIGH COURT] . In the absence of any other judgment pointed out by the A.R in favour of the assessee, we agree with the view of the earlier bench and accordingly the ground is decided in favour of the revenue Addition of interest paid on loans which were advanced interest free to subsidiaries of the Assessee Company - HELD THAT:- Assessee advanced interest free loans to its wholly owned subsidiaries out of commercial expediency for the purpose of utilizing the same in the business of the subsidiaries is a allowable deduction in terms of the decision of Hon ble Apex Court in the case of S.A Builders Ltd. -vs.- CIT(Appeals) Another [ 2006 (12) TMI 82 - SUPREME COURT] . The said stand has been further affirmed by the Jurisdictional High court in the case of Dalmia Cement [ 2001 (9) TMI 48 - DELHI HIGH COURT] Bharti Televenture Ltd [ 2011 (1) TMI 326 - DELHI HIGH COURT] relying on the decision of the Apex Court. From perusal of the Balance Sheet and the Audited accounts of the company, it leaves beyond doubt, the fact that the assessee had sufficient own funds for advancing such funds to its subsidiary company. Thus, based on the above factual as well as judicial pronouncements, the AO is directed to delete the disallowance made. Addition on account of disallowance u/s 14A while computing book profit u/s 115JB - HELD THAT:- The provisions of section 115JB relating to computation of book profit are amply clear and unambiguous. These provisions do not leave any room for adjustment by the assessing officer other than those mentioned in Explanation 1 to section 115JB to the net profit reflected in the accounts of any assessee and adjustment by way of disallowance u/s 14A is not included in the said explanation. This issue is also covered by the judgment of the Special Bench of Tribunal in the case of ACIT Vs. Vireet Investments (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] . Therefore, such upward revision in the sum of ₹ 26,53,10,000/-to the book-profit by making disallowance section 14A read with rule 8D is not permitted that being so, we decline to interfere with the order of Id. CIT (A) deleting the aforesaid addition. His order on this issue is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Interest u/s 234C of the Act should be charged on the tax due on returned income. Therefore, we direct the assessing officer to charge interest u/s 234C of the Act on the tax due on returned income. Admitting debentures redemption reserve as allowable expenses u/s 115JB - HELD THAT:- We are of the view that the DRR is ascertained liability and not a reserve. Accordingly, the revenue s ground is dismissed.
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2020 (1) TMI 476
Allowability of the expenses incurred out of the estimated income - Addition on account of alleged sales on protective basis - HELD THAT:- We find that the Tribunal has restored the matter back to the file of the Assessing Officer to determine the issue of allowability of the expenses incurred out of the estimated income of 2% against the claim of the assessed which is 0.25% to 0.5%. Addition in the hands of the assessee on protective basis , we find that the addition has been confirmed by the Ld. CIT(A) on the grounds that no evidence has been produced to prove that substantive assessment has been made in the hands of M/s Reliance Industries Limited. Before it has been submitted that the addition has been made in substantive capacity in the case of M/s Reliance Industries Ltd. The Assessing Officer is hereby directed to verify the records of M/s Reliance Industries Ltd. and a form that this amount has been added, and give relief in the case of this assessee for the AY 2007-08. Appeals of the assessee are allowed for statistical purposes.
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2020 (1) TMI 475
Addition on account of on-money receipts by the assessee on the basis of the statements recorded on oath u/s 131 of the buyers of the residential units - contention of the assessee inasmuch as the statement of a few buyers of the residential units cannot be extrapolated for considering the treatment of on-money receipts by the assessee - HELD THAT:- Hon ble Gujarat High Court in the case of CIT V. Ashland Corporation [ 1981 (7) TMI 57 - GUJARAT HIGH COURT] and in CIT v. Motilal C Patel Company [ 1988 (4) TMI 36 - GUJARAT HIGH COURT] held that it is settled law that no addition no addition can be made purely based on statement recorded during survey. CIT (A) was justified in deleting the addition made on account of estimation of on-money. We observe that decision of Calcutta High Court in the case of Amal Kumar Chakraborty v. CIT [ 1992 (8) TMI 11 - CALCUTTA HIGH COURT] relied by the revenue is not applicable as in that case statement were relied However, in the case of on-money of ₹ 12 crores has been disclosed based on statement of units holder. Therefore, the receipt of on-money has been taxed and disclosed by the assessee. Further, where ratio of the Jurisdictional High Court have been applied wherein they have held that only profit embedded in on-money receipts is to be taxed and not the entire receipts. Hence, said decision has no application in the case of the assessee - Decided against revenue
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2020 (1) TMI 474
Un-explained cash credit u/s. 68 - assessee had contended that the assessee has no other source of income other than Kirana business and therefore the unexplained deposits may also be treated as receipts from Kirana business and only the profit element from such turnover be brought to tax - HELD THAT:- Assessee has not established that the deposits are out of business transactions, but the peak cash credit added by the AO and confirmed by the CIT(A) also cannot be upheld because the assessee had declared the gross turnover of ₹ 30,00,000/- which is also part of the cash deposits. Therefore, the peak credit worked out by the AO could be a receipt from business transactions also. In view of these peculiar facts and circumstances of the case, direct the AO to treat all the unexplained cash credits also as the business turnover of the assessee and estimate the income thereon at the same rate at which the disclosed income is brought to tax. - Decided in favour of assessee.
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Customs
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2020 (1) TMI 510
Smuggling - Gold - Foriegn Currency - retraction of statements - acquittal of accused - respondents failed to give satisfactory explanation for the possession of those 24 marked gold biscuits and Indian and Foreign currency and also failed to produce any documents regarding lawful possession of the same - HELD THAT:- In the absence of any corroboration by an independent and reliable witness, a statement recorded under Section 108 in isolation could not be relied upon. One more point which comes to my mind is if the panch witnesses have not been produced, what is the evidence to satisfy that the said premises is where the respondents were found. I have to also note that an electricity bill in the name of Jayantilal Pandya has been seized from the said premises by prosecution. The said Jayantilal Pandya has not been summoned and no effort has also been made to trace this Jayantilal Pandya - no effort has been made to establish occupancy of the said premises by the two respondents. There is no evidence to even show how respondents were in occupation of the said premises, whether they were on leave and license basis or they were trespassers or they owned the premises. There is no evidence brought on record to clarify and factually establish the specific occupancy of room no.12 by respondents. There is an acquittal and therefore, there is double presumption in favour of the accused. Firstly, the presumption of innocence available to the accused under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured acquittal, the presumption of their innocence is further reinforced, reaffirmed and strengthened by the Trial Court. For acquitting accused, the Trial Court observed that the prosecution had failed to prove its case. The opinion of the Trial Court cannot be held to be illegal or improper or contrary to law - The order of acquittal cannot be interfered with - Appeal dismissed.
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2020 (1) TMI 508
Smuggling - contraband item - acquittal of accused - confessional statement - statement under coercion - offences punishable under Section 135(1)(a) (i) of the Customs Act 1962, read with Section 67 of the Foreign Exchange Regulation Act, read with Section 11 of the Customs Act, read with Section 77 of the Customs Act 1962, read with Section 135(1)(b)(i), read with Section 5a of the Imports and Exports (Control) 1947 - HELD THAT:- The fact is that the accused were kept in the custody of the customs authorities when the statements were recorded. The accused were arrested only in the evening of 24-1-1987 and produced before the Magistrate on 25-1-1987. As noted earlier, the detention, in my view, was not legal. Therefore, it will be reasonable to assume that there was coercion or undue pressure exerted on the accused to make the confession. There is an acquittal and therefore, there is double presumption in favour of accused. Firstly, the presumption of innocence available to the accused under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless they are proved guilty by a competent court of law. Secondly, accused having secured their acquittal, the presumption of their innocence is further reinforced, reaffirmed an The opinion of the Trial Court cannot be held to be illegal or improper or contrary to law - The order of acquittal, thus, not be interfered with - appeal dismissed.
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2020 (1) TMI 504
Jurisdiction - power to issue SCN - concealment of smuggled nature of goods - principles of natural justice - HELD THAT:- In the matter of MANGALI IMPEX VS. UNION OF INDIA reported in [2016 (5) TMI 225 - DELHI HIGH COURT] , similar issue is being adjudicated and same is at large before the Hon ble Apex Court wherein the issue relating to the insertion of sub-Section (11) of Section 28 is also under consideration. It is because of this precise reason, Customs, Excise and Service Tax Appellate Tribunal has taken a view that issue of jurisdiction would go to the root of the matter and as such, by setting aside the order passed by the Original Authority has remanded the matter back to the Adjudicating Authority with a direction to adjudicate the issue of jurisdiction at the first instance after receiving the judgment of the Hon ble Apex Court in MANGALI IMPEX VS. UNION OF INDIA. Said order of remand does not suffer from any infirmity and no substantial question of law would arise for our consideration - Appeal cannot be admitted - appeal dismissed.
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2020 (1) TMI 503
Smuggling - foreign currency - retraction of statements relied upon - prosecution of accused person - Section 137(1) of the Customs Act - HELD THAT:- On perusal of deposition of PW 1 and PW 2, it has come on record that no incriminating material was found either on the person of the accused no.2 or from his baggage. The only material is sought to be relied upon is his statement recorded on 24th March 1996 which is subsequently retracted. The Appeal is premised on the ground that the learned Chief Metropolitan Magistrate has failed to accord any weightage to the said statement wherein the accused has confessed that he had met one Gurmit Singh and he acted as a carrier for smuggling the foreign currency and he also agreed to accompany the accused no.1 who was to act as a carrier to ensure the safe delivery of the foreign currency at Dubai. Perusal of confession statement of accused no.2 would disclose that there is no warning in the form of intimation contained therein that the statement is likely to be used against him, the intention being the possibility of coercion or inducement while recording the said statement is to be ruled out. The Court is duty bound to examine whether the statement referred to as a confessional statement meets the test of truthfulness and being voluntary in nature. In absence of any independent material brought on record by the appellant, the Chief Metropolitan Magistrate was perfectly justified in acquitting the accused no.2 - In absence of any evidence corroborating the statement of the accused no.2 made before the Custom Officer on 24th March 1996 under Section 108 of the Customs Act, the statement in isolation do not warrant conviction, particularly when it is retracted with a plea of coercion. Appeal dismissed.
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2020 (1) TMI 489
Revocation of CHA License - forfeiture of security deposit - no physical interaction with the exporter was made - smuggling of Red Sanders - export consignment which was cleared by the appellant through the impugned Shipping Bill which pertained to HB wires contained logs of Red Sanders, which is banned for export in terms of export and import policy - violation of provisions of Section 11A, 11 (d), 11 (1), 11 (n) of CBLR - HELD THAT:- The appellant has not obtained the job of clearance of export consignment directly through exporter M/s. Panel Pin Manufacturing, but through series of intermediary which included manipulation of Red Sander smuggling. Though the necessary verification about such KYC etc., was conducted by the appellant, however, no physical interaction with the exporter was made. This in itself will not be a major infraction of the Provisions of CBLR which does not envisage the physical verification of the exporters and antecedent including the verification of factory premises of the exporter and the goods contained in the container. The revocation of the license of CHA is disproportionate of the offence committed by them under the various provisions of CBLR 2013 as amended. So is the case of forfeiture of the Security Deposit - But in the fact and circumstances of the case, we also find that the appellant deserves to be cautioned and vigilant in future for taking appropriate precaution while entering into the business through intermediaries. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 488
Smuggling - Betel Nuts - Section 123 of Customs Act, 1962 - burden to prove - HELD THAT:- Betel nuts are not notified items under Section 123 of Customs Act, 1962, hence the onus to prove that the same was of foreign origin and too smuggled lies solely on the Revenue. Foreign origin have been admitted by the Appellant and have produced the supporting documents, which are found to be correct - Betel nuts are not notified goods, and the onus was discharged by Appellant by producing the supporting documents. There could be no mens rea for smuggling as the duty payable was only 5% under Indo Myanmar Trade under Notification 09/1995-Customs. Betel nut was also importable at NIL rate of duty Notification 96/08-Customs and 09/2009-Customs, under Scheme of Duty Free, Quota Free Import from Least Developed Country to which Myanmar belong. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 483
Smuggling - Gold Bullion - gold moved for the purpose of melting/re-melting - confiscation on reasonable belief that the goods were illegally imported into India through unauthorized route without any valid documents - HELD THAT:- The adjudicating authority has taken the view that the claim of lawful acquisition of the subject gold by M/s. Anjani Gold Private Limited, dealing with in Gold Bullion for years and handing over gold of such high value to a person without any written agreement is surprising and unacceptable. Non-mentioning of marks brand as found on two gold biscuits in the Tax Invoice and holding the subject gold for about three months in a stock was observed as deceitful attempt to salvage the seized gold. Learned Commissioner in passing the impugned order did not find that the burden of proof as envisaged under Section 123 of the Customs Act, 1962 had been discharged by the appellant. The appellant is the Director of a Company admittedly dealing with gold bullion. It is also on record that apprehension of Shri Amol Deshmukh with the subject gold was not brought to the notice of the claimant before he was produced to the Judicial Magistrate under arrest. On perusal of the statements recorded by the Revenue, it reveals that at no point of time ownership of the gold was agitated. The seized gold was duly recorded in the Books of Accounts of M/s. Anjani Gold Private Limited which was admittedly computerized. The purchase invoice issued by State Bank of India showing that 198015.52 grams in Customs auction is also not disputed by the Revenue - the obligation under Section 123 of the Customs Act, 1962 has been discharged by the claimant of the gold. The revenue has not been able to adduce any evidence to prove that the subject gold has been illegally imported by the appellants and the order of confiscation under Section 111(b) and under Section 111(d) of Customs Act is not sustainable as imposition of penalty under Section 112 is consequential to confiscation of goods under the Customs Act - imposition of penalty on the Director of a Company without making the Company a party to the proceeding is not justifiable and accordingly set aside. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 482
Valuation of imported goods - Ball Valves and Bibcock - allegation of undervaluation of goods - the value is sought to be enhanced on the basis of proforma invoice which is issued by the exporter to some other importer in India and not in the name of the appellant - Confiscation - redemption fine - penalty. HELD THAT:- It is on record that the bills of entry were assessed by the Proper Officer and the assessable value was determined by him and it was not challenged either by the appellant or by the department. In course of enquiry, a proforma invoice was recovered showing a different price from that as shown in the invoice submitted at the time of import. However, it is observed that the proforma invoice is not issued in the name of the appellant. Otherwise also the price quoted in a proforma invoice cannot be held as the actual prices since the price of goods are settled after negotiation between the two parties. The revenue has not produced any document to prove that there was any extra payment made by the appellant towards purchase of the said goods. The confiscation of the goods and imposition of penalty are consequential to the alleged under valuation of the imported goods by the appellant - Since there are no sufficient grounds as required for enhancement of assessable value, imposition of redemption fine in lieu of confiscation under Section 125 of the Customs Act, 1962 and imposition of penalty under Section 112 of the Customs Act, 1962 on the appellant is not sustainable - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 480
Revocation of CHA License - forfeiture of security deposit - non-compliance with the time limit provided under Regulation 20 of CBLR, 2013 - allegation that the entire work of import clearance was undertaken by one Sri Dattatray S. Weling and it is alleged that said Sri Weling is a third party to whom the CHA had lent out their licence against commission. Whether Sri Dattatray S. Weling was a G card holder of the appellant CHA M/s. JD Impex at Mumbai at the relevant point of time when the import consignment of M/s. Jude s International INC was handled by the appellant CHA? HELD THAT:- It is observed that during the course of cross-examination before the Inquiry Officer and Asstt. Commissioner of Customs in the course of inquiry proceeding, said Sri Dattatray S. Weling had categorically stated that he was holding G card No. W-16 for M/s. JD Impex. However, since no such document was in record, this Bench under Interim Order dated 26.09.19 adjourned the matter upon the prayer of the appellant for time to produce such documents - No copy of the original G card of Sri Dattatray S. Weling could be produced by the appellant before this Bench on the pretext that DRI, Mumbai had taken away the original G card of said Sri Dattatray S. Weling during the course of investigation and till date the same had not been returned. To substantiate such fact/argument, a letter dated 16.10.19 has been produced before this Bench wherein it appears that said Sri Dattatray S. Weling on behalf of the appellant M/s. JD Impex had stated before the DRI authority of Mumbai about the fact of submission of original G card by him before them and he had also prayed for return of the same. We find that such letter has also been duly received by one Vikas Yadav, IO/DRI/MZU ON 16.10.19. During the course of hearing on 25.10.19 before this Bench, there is no averment on the part of the respondent authority that contents and facts of the said representation dated 16.10.19 of the appellant before DRI, Mumbai are not correct. It is also not argued by the respondent authority that the original G card of Sri Dattatray S. Weling is not with the DRI, Mumbai. However, we find no reason to disbelieve the Customs record verifying the fact that Sri Dattatray S. Weling was holding G card for CB, M/s. JD Impex. Whether act of said G card holder amounts to due discharge of obligations by the CB/CHA? - HELD THAT:- Under Regulation 17 of CBLR, 2013, the Customs Broker is entitled to appoint /employ any number of person to assist him in the business transacted by him after obtaining approval of the Deputy Commissioner of Customs or Asstt. Commissioner of Customs. Any such employed person who passes the examination under sub-regulation( 3) of Regulation 17 of CBLR, 2013 is issued with a photo identity card in Form G under Regulation 17(7) ibid by the Dy. Commissioner or Asstt. Commissioner of Customs. Regulation 17(9) of CBLR, 2013 specifically provides that the Customs Broker shall be held responsible for all acts or omissions of his employees during their employment. The employment of G card holder by a CB, as such, is not only upon approval of the Deputy Commissioner or Asstt. Commissioner of Customs but also subject to passing of examination conducted by the said Dy. Commissioner or Asstt. Commissioner of Customs to ascertain the adequacy of knowledge of such employee regarding the provisions of the Act subject to which goods and baggages are cleared through Customs - Further, when the Customs Broker is held responsible for all acts and omission of such employee during the employment, all acts or omission during the course of transaction of business of CB by such employee is deemed to be acts or omissions of the CB. In the present case, it is evident that Sri Dattatray S. Weling had discharged all the obligations under Regulation 11 of CBLR, 2013, but the respondent Commissioner arrived at a conclusion that there was violation of different obligations under different sub-regulations of Regulation 11 of CBLR, 2013 by the appellant CB, M/s. JD Impex upon the erroneous finding of fact that Sri Dattatray S. Weling was an unauthorized person. Since Sri Dattatray S. Weling was G card holder of appellant M/s. JD Impex, as discussed supra, and since his fulfilment of obligations under Regulation 11 of CBLR, 2013 deemed to discharge of obligation by CB, M/s. JD Impex, there cannot be any violation of any of the sub-regulations of Regulation 11 of CBLR, 2013 on the part of the CB/ appellant in the present case. There was no violation of Regulation 11 of CBLR, 2013 on the part of the appellant/ CB in the present case and hence, the impugned order revoking their CB Licence and forfeiture of their security deposit, is liable to be quashed - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 478
Misdeclaration of imported goods - Behind the Rice Cookers , Cigarettes of foreign origin were found - prohibited goods or not - imposition of penalty u/s 112 of CA - quantum of penalty - HELD THAT:- Shri Pawan Kumar Ralli, Shri Naresh Dutta and Shri Sreepraksh Tiwary were complicit in this smuggling racket and hence liable for penalty under Section 112. As per the statutory provisions of Section 112, the cases are divided in three categories for the purpose of computation of maximum penalty imposable. One of the categories is of those cases wherein the value declared is higher than the actual value of goods in question - In the instant case, the actual value of goods is found to be much higher than the value declared. Therefore, this category is not applicable. The second category is of prohibited goods. In the show cause notice, it is stated that Rule 11 of the Foreign Trade (Regulation) Rules, 1993 stipulates that on importation of goods, the owner shall state the true description in the Bill of Entry and the goods in question falls in the category of prohibited goods, by virtue of Section 111(d) of the Customs Act, 1962, renders the goods in question as prohibited. As per the judgment of Hon ble High Court in Gopal Saha vs. Commissioner of Customs [2016 (5) TMI 83 - CALCUTTA HIGH COURT] , the goods in question cannot be termed as prohibited goods merely for misdeclaration in the Bills of Entry, for the purpose of imposing penalty under Section 112. Now, the only category left is of dutiable goods other than prohibited goods. In this category, maximum penalty impossible in 10% of duty sought to be evaded or five thousand rupees, whichever is higher, In the present case, the Customs Duty sought to be evaded is nowhere quantified. Learned Authorized Representative for the Revenue also failed to help in this regard. Now, therefore, maximum penalty impossible in the instant case is Rupees Five Thousand only. Accordingly, the penalty imposed upon Shri Pawan Kumar Ralli, Shri Naresh Dutta and Shri Sreepraksh Tiwary is reduced to ₹ 5,000/- each. Appeal allowed in part.
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Insolvency & Bankruptcy
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2020 (1) TMI 473
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - pre-existing dispute or not - HELD THAT:- There is a suit pending with regard to the same claim and parties have agreed to settle the matter. In view of the fact that there was a pre-existence of dispute and parties have settled the matter before the constitution of the 'Committee of Creditors', we set aside the impugned order dated 18th October, 2019 - the 'Corporate Debtor' (company) is released from all the rigours of law and is allowed to function independently through its Board of Directors from immediate effect. The 'Interim Resolution Professional' will hand over the assets and records to the Board of Directors. Appeal allowed.
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2020 (1) TMI 472
Service of notice - initiation of CIRP - Whether the demand notice issued U/S 8 of the I B Code 2016, against the corporate debtor, for the dues of sister concern/group company, can be treated as a valid notice? - HELD THAT:- Admittedly invoices have been issued in the name of 'M/s Flywheel Logistics Pvt. Ltd.'. It is also on record that 'M/s Flywheel Logistics Pvt. Ltd.' and 'M/s Flywheel Logistics Solutions Pvt. Ltd' are different 'Corporate Entities', having deferent CIN Numbers and registered addresses - it is clear that the Respondent No 1 Applicant / 'Operational Creditor' has no right to claim dues, relating to the invoices issued against 'M/s Flywheel Logistics Pvt. Ltd.', from the corporate debtor M/s 'Flywheel Logistics Solutions Pvt. Ltd.' i.e. FLSPL, the Respondent No 2, which is a separate corporate entity, having different CIN Number. It is also on record that the mandatory primary requirement for filing petition U/S 9 of the 'Insolvency and Bankruptcy Code, 2016' is the service of the Demand Notice U/S 8 of the Code. The demand notice should have been served along with the copy/bill(s) / invoice(s) on the 'Corporate Debtor' - But in the present case, the Bill / Invoice was raised against, M/s Flywheel Logistics Private Limited, whereas the mandatory demand notice under Section 8 of the 'IBC' has been served against the 'Flywheel Logistics Solutions Pvt. Ltd.'. The demand notice issued against the 'Corporate Debtor' is not a valid notice U/S 8 of the Code. The alleged demand notice relates to the dues of the other Company, namely 'M/s Flywheel Logistics Private Limited'. For filing a petition under Section 9 of the Code, service of demand notice under Section 8 is mandatory requirement, and after that if a 'Corporate Debtor' fails to pay the dues within 10 days of service of demand notice with copy of the invoices, as mentioned in sub-Section 1, or bring to the notice of the 'Operational Creditor' existence of dispute, then right to file an application under Section 9 of the 'Insolvency and Bankruptcy Code, 2016' accrues. In this case demand notice in Form 3 and Form, 4 has been issued in the name of 'M/s Flywheel Logistics Solutions Pvt. Ltd.' - But the amount being claimed by the said demand notice is not relating to the 'Corporate Debtor' but relates to another company viz. 'M/s Flywheel Logistics Pvt. Ltd.' The service of demand notice cannot be treated as valid and proper service - impugned order regarding admission of the Company Petition filed under Section 9 of the 'Insolvency and Bankruptcy Code, 2016 is set aside - appeal allowed.
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2020 (1) TMI 471
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - total debt due and payable - only contention raised is that the rates of transportation were much higher than charged by others and that there was connivance by some employees - HELD THAT:- There is no denial that they did not avail of the Operational Creditor's services for transportation. There is only a reference that charges were quite higher. However, there is no repudiation of the agreement dated 28.7.2015, 14.08.2015 and 01.06.2016 at any time - There is only an attempt to clutch at straws by saying that there was some connivance on the part of some of the Corporate Debtor's employees. However, even if this is accepted at face value, there may only be various other legal options for the Corporate Debtor to proceed against the employees in question. This would not have the effect of annulling the services provided by the Operational Creditor to the Corporate Debtor. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Application admitted - moratorium declared.
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2020 (1) TMI 470
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute or not - HELD THAT:- The procedure in relation to the initiation of Corporate Insolvency Resolution Process by the Financial Creditor is delineated under Section 7 of the Code, wherein only Financial Creditor / Financial Creditors can file an application. As per Section 7(1) of the Code, an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors. The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code and precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money. In the present case applicant had sanctioned and disbursed the loan which are recoverable with applicable interest by entering in to loan agreements with the respondent borrower. The corporate debtor had undertaken the liability to repay the loan along with the agreed interest. The loan/financial facility was clearly disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application based on the arbitral awards includes both the component of outstanding principal and interest - not only the present claim comes within the purview of 'Financial Debt' but also the applicant can clearly be termed as 'Financial Creditor' of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. The corporate debtor is entitled to point out to the Adjudicating Authority that a default has not occurred; in the sense that a debt, which may also include a disputed claim is not due i.e. it is not payable in law or in fact. Respondent Corporate Debtor has miserably failed to raise any good defence against the petition and also has failed to place its updated financial statement to show that no financial debt is due. There is no proof to show the re-payment of the entire awarded amount to the financial creditor - The material placed on record confirms that the respondent corporate debtor committed default in repayment of the financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. All the requirements of Section 7 (5) (a) of the Code stand fulfilled. Application admitted - moratorium declared.
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2020 (1) TMI 469
Rejection of Resolution plan - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It was brought to the knowledge of the CoC members that the Resolution Plan was rejected and the 270 days period was going to expire on 22.04.2019. There was no possibility of resolution taking place in Emgee Cables and Communications Limited. Therefore, the CoC unanimously passed a resolution to liquidate the Corporate Debtor. This Tribunal is constrained to order for liquidation of the corporate debtor and in such background the corporate debtor stands liquidated with the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of the Insolvency and Bankruptcy Code, 2016 and more particularly as given in Chapter III of the Insolvency and Bankruptcy Code, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017.
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2020 (1) TMI 468
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - existence of dispute or not - time limitation - HELD THAT:- It has been concluded from the contentions of the corporate debtor that the corporate debtor has tried to create and raise a pre-existing dispute by asserting that the entire gamut of dispute is amongst the applicant and the corporate debtor with respect to the quality of the product being rendered by the applicant and by annexing the debit notes which were never issued to the applicant prior but were raised only after the issuance of the section 8 demand notice. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. Thus, there is no merit in the so-called dispute raised by the corporate debtor in reply to Section 8 demand notice and in the reply to the application. Further, this leaves no doubt that the default has occurred with respect to the payment of the operational debt of the applicant - thus, the application is complete as per the requirements of section 9 of the code. Further the date of default occurred from 31.08.2017 and hence the debt is not time barred and the application is filed within the period of limitation. Application admitted - moratorium declared.
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Service Tax
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2020 (1) TMI 519
Classification of services - appellant desires to acquire license to manufacture products manufactured with the use of Timken (USA) s proprietary technical information and to service the products by using Timken (USA) s proprietary technical information - classified under Franchisee service or under intellectual property service - it was held by high court that the services availed by the appellant are more akin to franchise services rather than intellectual property right service. HELD THAT:- There are no merits in the appeal - appeal dismissed.
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2020 (1) TMI 505
Rectification of mistake - furnishing of copy of the multimodal certificate issued by the Director-General of Shipping - allegation of mistake on the part of its consultant in enclosing the original certificate only for the period commencing from September 2014 - HELD THAT:- The fact remains that the petitioner has given partial relief on the strength of the renewal is a certificate for the period after September 2014. Since there is a bona fide mistake and but for the non-filing of the original certificate of registration issued to the petitioner for the earlier period, the demand would not have been confirmed. I m therefore convinced that the petitioner is entitled to the relief. Merely because renewal certificate for the earlier period was not produced earlier cannot mean that the order cannot be rectified under section 74 of the Finance Act, 1994. Ultimately, it is the duty of the respondent to pass a fair order and it is no part of the duty to deny the benefit which was legitimately available to the petitioner if materials were brought to the knowledge of the respondent though subsequently. The writ petition is allowed with liberty is given to the respondent to call upon the petitioner to pay the tax for services if any which are outside the purview of the Circular No.197/7/2016-ST dated 12.8.2016 issued by the Department of Revenue after due notice to the petitioner.
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Central Excise
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2020 (1) TMI 487
CENVAT Credit - admissibility of balance 50% Cenvat credit on capital goods, in terms of Rule 57 AC (2) of the erstwhile Central Excise Rules, 1944 read with Rule 4 of the Cenvat Credit Rules, 2002 - period 2000-01 to 2003-04 - CBEC Circular No.267/26/2006-CX. dated 28.06.2006 - HELD THAT:- Reliance placed in the case of M/S INDIAN OIL CORPORATION LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2013 (9) TMI 419 - PATNA HIGH COURT] where the decision was rendered by the Hon ble Patna High Court in the context of Rule 4(2)(b) of the Cenvat Credit Rules, 2002, which was effective till 09.09.2004 and the ratio of the said decision applies to the facts of the present case. Therefore, the balance 50% credit taken by the appellant before use of the capital goods, is not admissible. The capital goods were subsequently installed/put to use, the fact of which has also been acknowledged by the learned adjudicating authority in the impugned order. We also take note of the provisions of Rule 4(2)(b) of the Cenvat Credit Rules, 2004 (effective from 10.09.2004), in terms of which the condition of use was omitted - there is no time limit is stipulated under the Cenvat Scheme, for taking credit on capital goods, since as per the scheme, the balance credit can be deferred by an assessee to be taken in any financial year or years, subsequent to the financial year in which the capital goods were received. The appellant would be eligible for the credit on 10.09.2004. The appellant, however, would be liable to pay interest, in respect of the period i.e. from the date of taking the credit till 09.09.2004, as per the provisions of law, as applicable - appeal disposed off.
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2020 (1) TMI 486
CENVAT Credit - inputs/capital goods - MS Angles, channels, flats, beam, CR coils, HR sheets, welding electrodes etc. - period April 2003 to September 2010 - HELD THAT:- In order to justify the claim the appellants have to prove the receipt, storage and consumption of such inputs / capital goods in the manufacture of final products or intermediate products used in the final products - Learned Commissioner has found that the appellants, at the time of availing the exemption contained under Notification 67/95, have not given any indication of the capital goods captively manufactured and used. We hold that benefit, if otherwise available to the appellants cannot be denied only for the reason that they have not indicated at the time of availing. While holding that the credit of disputed items is eligible to be availed, when used as inputs or capital goods used in the manufacture of final products, we find that it is incumbent upon the appellant to prove to the satisfaction of the proper officer that such inputs/capital goods have been purchased and utilised in the factory. In the absence of such records credit cannot be given just on the claim of the appellants - As per the records made available before us, the Bench is not in a position to arrive at the fact as to whether the appellant have produced any record of receipt and usage of the said inputs/capital goods in their factory. However, the appellants have a strong case on merits. The issue requires to go back to the original Authority to allow credit, after going through records/returns that may be submitted by the appellants - Appeal allowed by way of remand.
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2020 (1) TMI 485
Recovery / Forfeiture of amount deposited in the Escrow account instead of refund - Amount was paid by utilizing the credit and challan - HELD THAT:- The issue with regard to demand arising consequent to denial of exemption benefit is not in dispute. In fact, the assessee appellant has already made the duty payment. The Ld. Commissioner has duly noted the fact that said payment of duty has been affected both by challan payment and CENVAT Credit utilization. However, he rejected the appeal with the observation that credit cannot be further allowed, which in our view is clearly erroneous inasmuch as the assessee has sought relief for the amount which has been paid twice. The Ld. Commissioner was not required to re-decide the credit eligibility in the impugned order. The Ld. Commissioner, instead of arriving at the conclusion that credit cannot be further allowed, which was never before him, ought to have appreciated the fact of payment of amount by challan as well as by credit utilization has been made by the appellant - Since the benefit of exemption has been denied and the assessee has duly made the payment by utilization of credit as also accepted by the department, the payment of amount by challan has to be at best considered as deposit which cannot be retained by the department and is liable to be refunded back. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 484
Concessional rate of duty - supply of Aviation Turbine Fuel (ATF) falling under Chapter 2710.90 of the First Schedule to Central Excise Tariff to Aircraft operating through Kolkata Airport both on domestic and foreign run - it is alleged that the said ATF was supplied to flights operated by Air India for plying between Kolkata and Mumbai in India without a trip to foreign Airport on their voyage and therefore, the appellant is not entitled to concessional rate of central excise duty as provided in Notification no. 46/94-CE dated 22.09.2014. HELD THAT:- On perusal of Circular 65/2001-Cus. dated 19.11.2001 as clarified by Circular No. 33/2002-Cus dated 25.06.2002, it is found that the Circular makes aircraft eligible for duty benefits as available to the foreign going aircraft, even though the aircraft touches two Indian ports and that mere change in the flight numbers will alter the situation. Appellant has also submitted letter dated 30.08.2001 issued by Air India confirming that the flight AI-680/681 is an international flight having connections for passengers from USA/UK on the inbound and on the outbound to destinations to Europe/Middle East/UK/USA etc. The appellant cannot be deprived of the benefits extended in the notification and therefore, the impugned order confirming demand of duty, interest and penalty cannot sustain and hence, the same is set aside - Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 481
Rebate claim - export of final products from the factory - process amounting to manufacture or not - Manufacture on job work basis - assembly - they procured input materials which comprised of parts/equipments and utilised the same for manufacturing of Briqueting Hydraulic Press (Bailing Press) and Cut to Length Line and Continuous Automatic Coil to Coil Colour Coating Line, with Operational Spares.- CENVAT Credit - HELD THAT:- It is an undisputed fact that the appellant procured duty paid machineries, parts and accessories of Continuous Automatic Coil to Coil Colour Coating Line and Briqueting Hydraulic Press and carried out the processing jobs thereon as set out in the impugned order, which included assembly to produce the aforesaid final products which were exported upon payment of duty under claim of rebate. It is also seen from the records that the input machines, parts and accessories were goods classifiable as excisable goods by themselves under tariff items different from the tariff items under which the exported final products were classified - the activities undertaken by the appellant amounted to manufacture of excisable goods within the meaning of Section 2(f) of the Central Excise Act, 1944. CENVAT credit - HELD THAT:- The appellant is eligible to avail Cenvat credit of the duty paid on the said input machineries, parts, etc. under the Cenvat Credit Rules and there is no infirmity on the part of the appellant in availment of Cenvat credit in the instant case. The disallowance of Cenvat credit of ₹ 1,76,17,647/- and the duty demand of ₹ 61,94,772/- confirmed by the impugned order against the appellant are therefore unsustainable. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 479
Clandestine removal - undervaluation of Silico Manganese - charges merely on the basis of entries in private diary without other corroborative evidence of flow back of fund etc. - HELD THAT:- The Ld. Commissioner in the Impugned Order clearly held that there is no evidence available on record to substantiate charges of undervaluation in respect of duty demand of ₹ 2,34,62,483/-. In absence of evidence of flow back of funds over and above the invoice price, which are missing in the instant case, the charge of undervaluation cannot be sustained. There is no material on record to prove that the material supplied by the assessee were not of inferior quality but were prime material. The Department failed to cull out evidence in investigation with the buyers in support of the charge as none of the buyers have accepted payment of any amount over and above the invoice price nor receipt of prime quality materials in the guise of inferior quality material. Further, the entries found in the private diaries were only for the period Jan 2001 to Sep 2001 i.e. eight months - On facts as stated and under the circumstances, there are no hesitation to hold that the order of the Ld. Commissioner is in accordance with law and is upheld and hence the Department Appeal is devoid of any merits. In the case of Good Kare Medico Pvt. Ltd. Vs. CCE [2018 (10) TMI 1199 - CESTAT ALLAHABAD] , it is held that order based on rough entries made in two sheets recovered from Director s residence in his own handwriting, when there is no other corroborative evidence, hence merely on the basis of such rough entries without corroborative evidence, clandestine activities cannot be alleged. Since in the instant case the duty demand of ₹ 13,36,476/- is upheld by Ld. Commissioner merely on the basis of entries in the private diary maintained by the Managing Director who never confessed the guilt and whose statement is not tested in accordance with Section 9D of the Central Excise Act, 1944. The Appeal filed by Sri Hari Krishna Budhia, Managing Director and Sri A.D. Singh, Authorised Signatory challenging imposition of penalty under Rule 209A of the Central Excise Rules, 1944/ Rule 26 of Central Excise Rules, 2001 are allowed and the penalty is set aside - Appeal allowed in part.
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2020 (1) TMI 477
CENVAT Credit - inputs/capital goods - allegation that MS rounds, MS Tor, MS angles, MS channels, MS flat, MS joist, plywood lead scrap and aluminium scrap received in the factory which are neither inputs nor capital goods and which had not been utilized in or in relation to manufacture of final products - contention of the appellant is that they are exporting cast article of iron and steel and for that they require packing material which they are making from MS Rounds, MS Tor, MS angles, MS channels, MS flat, MS joist, plywood lead scrap and aluminium scrap. HELD THAT:- The learned Commissioner in his finding has not disputed receipt of cenvatable material and their duty paying character. RG-23A Part-I/RG-23C Part-I Register maintained during the material period indicate that the duty paid on material was used entirely. Learned Commissioner has also recorded in his finding that against the spot memo issued to them in course of audit, the said assessee mentioned that the MS Rounds, MS Tor, MS angles, MS channels, MS flat, MS joist, plywood lead scrap and aluminium scrap has been utilized for manufacturing of packing material. Prima facie, we find that the contention is that during the material period, they have exported the quantity of 40,000 MT (Approx.) and the input utilized for the packing material was only 2,000 MT approx. which is only 2%, which is also not disputed by the Commissioner. In such a situation we do not find any substance in the charge that the inputs have not been used in the manufacture of packing materials, which were used as the packing material for export goods. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (1) TMI 512
Levy of purchase tax - freight charges or delivery charges paid by the Sugar Mills, Assessee to the Lorry Owners for getting the sugar cane from the fields of the sugar cane growers to the factory gate - inclusion of the charges in purchase price or not - Sellers/Agriculturists are unregistered dealers - TNGST Act - HELD THAT:- The controversy is no longer res integra as this very controversy came to be decided by a Full Bench of this court in the case of CHENGALVARAYAN CO-OPERATIVE SUGAR MILLS LTD. OTHER VERSUS STATE OF TAMIL NADU OTHER [ 1996 (7) TMI 522 - MADRAS HIGH COURT] which came to be affirmed by the Hon'ble Supreme Court in the case of EID. PARRY (I) LTD. OTHERS VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER [ 1999 (12) TMI 708 - SUPREME COURT] and later on followed by the Hon'ble Supreme Court in the case of PONNI SUGARS (ERODE) LTD. VERSUS DEPUTY COMMERCIAL TAX OFFICER [ 2005 (11) TMI 247 - SUPREME COURT] . It was held by a Full Bench of this court in the case of CHENGALVARAYAN CO-OPERATIVE SUGAR MILLS LTD. that if subsidy-whatever name or nomenclature it may assume and whether paid or payable prior to or subsequent to the entering into contract of sale-is linked to the supply of sugarcane, such subsidy and expenses incurred for the transportation of the sugarcane to the factory site-whether incurred by the grower initially and paid by the sugar mills subsequently or incurred by the sugar mills and shown separately in the invoices-by adopting whatever procedure reflecting those amounts in the accounts-shall form part of the price includible in the purchase turnover as such transportation alone makes the passing of property in the sugarcane sold by the grower to the assessee-mills complete. Since the view of the learned Sales Tax Appellate Tribunal is in consonance with the decision of the Full Bench of this Court and that of the Hon'ble Supreme Court, there are no reason to take a different view as there is no distinction on facts in the present case and the purchase of sugar cane by the Assessee Sugar Mill during the period in question also happened in a similar way and therefore, the mere bifurcation of prices in the invoices to the extent of transport charges or plantation subsidy will not materially affect the aforesaid prevailing legal position. The Tribunal is justified in imposing the purchase tax on the Assessee Sugar Mill on the entire purchase price including the components of price for the sugar cane, plantation subsidy and transportation charges paid by the Assessee for transportation of sugar cane from the sugarcane fields to the factory premises of the Petitioner - appeal dismissed - decided against assessee.
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2020 (1) TMI 506
Jurisdiction - powers to the authorities under TNVAT to summon documents and witnesses - Misuse of IEC Code - burden of proof - Whether the petitioner had allowed M/s. Saabari Logistics Private Limited to use the IE code or whether the IE code has been misused by M/s. Saabari Logistics Private Limited can be independently investigated by taking assistance of the customs department? HELD THAT:- The TANVAT Act gave ample powers to the authorities to summon documents and witnesses and to call for information from the other Departments under Sections 81 and 82 of the Act. Similar provisions are there in the newly enacted GST Acts - The respondents are therefore directed to exercise their power under Section 81 and 82 of the TN VAT Act read with T.N. GST Act, 2017 and Central GST Act, 2017 and investigate and gather information as to whether there was indeed import by the petitioner himself or whether there was impersonation and misuse of IE Code of the petitioner as is being now projected. This exercise can be carried out by the respondents in the exercise of statutory powers vested with them. The case is remitted back for further investigation by the respondents and to pass a fresh order after completing investigation. The respondents shall endeavour to complete the investigation within a period of 12 months from the date of receipt of a copy of this order - After the conclusion of the investigation, the petitioner shall be confronted with the evidence that emanate from the investigations. The petitioner may thereafter file a reply. The respondent shall thereafter pass a speaking order after giving an opportunity of personal hearing to the petitioner within a period of 15 months from the date of receipt of a copy of this order. Appeal allowed by way of remand.
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