TMI Tax Updates - e-Newsletter
January 2, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. New Year 2019! GST Resolution

   By: Ganeshan Kalyani

Notifications

Customs

1. 86/2018 - dated 31-12-2018 - Cus

Seeks to amend notification no. 296/76 dated 02.08.1976 to exempt temporary importation of private road vehicles from IGST and compensation cess.

2. 85/2018 - dated 31-12-2018 - Cus

Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2019, when imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA).

3. 84/2018 - dated 31-12-2018 - Cus

Seeks to amend notification No. 53/2011-Customs dated 01st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 01.01.2019.

4. 83/2018 - dated 31-12-2018 - Cus

Seeks to amend notification No. 152/2009-Customs dated 31.12.2009 so as to provide deeper tariff concessions in respect of specified goods imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement (CEPA) w.e.f. 01.01.2019.

5. 82/2018 - dated 31-12-2018 - Cus

Seeks to amend notification No. 46/2011-Customs dated 01.06.2011 so as to provide deeper tariff concessions in respect of specified goods when imported from ASEAN under the India-ASEAN Free Trade Agreement w.e.f. 01.01.2019

6. 103/2018 - dated 31-12-2018 - Cus (NT)

Notification of Foreign Post Offices-amendment to Notification No. 31/2017-Customs (NT) dated 31st March, 2017.

DGFT

7. 47/2015-2020 - dated 31-12-2018 - FTP

Addition of Krishnapatnam port for import and export of sawn timber at SI. No. 181, Chapter 44 of Schedule 2 of ITC(HS) Classification of Export and Import Items

GST

8. 79/2018 - dated 31-12-2018 - CGST

Seeks to amend notification No. 2/2017 - Central Taxes dated 19.06.2017

9. 78/2018-Central Tax - dated 31-12-2018 - CGST

Seeks to extend the due date for furnishing FORM ITC-04 for the period from July, 2017 to December, 2018 till 31.03.2019.

10. 77/2018 - dated 31-12-2018 - CGST

Seeks to fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-4 for the period July, 2017 to September, 2018.

11. 76/2018-Central Tax - dated 31-12-2018 - CGST

Seeks to specify the late fee payable for delayed filing of FORM GSTR-3B and fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-3B in specified cases.

12. 75/2018 - dated 31-12-2018 - CGST

Seeks to fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-1 for the period July, 2017 to September, 2018 in specified cases.

13. 74/2018 - dated 31-12-2018 - CGST

Central Goods and Services Tax (Fourteenth Amendment) Rules, 2018.

14. 73/2018-Central Tax - dated 31-12-2018 - CGST

Seeks to exempt supplies made by Government Departments and PSUs to other Government Departments and vice-versa from TDS.

15. 72/2018 - dated 31-12-2018 - CGST

Seeks to extend the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the newly migrated taxpayers.

16. 71/2018 - dated 31-12-2018 - CGST

Seeks to extend the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the newly migrated taxpayers.

17. 70/2018-Central Tax - dated 31-12-2018 - CGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers.

18. 69/2018 - dated 31-12-2018 - CGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers.

19. 68/2018-Central Tax - dated 31-12-2018 - CGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers.

20. 67/2018 - dated 31-12-2018 - CGST

Seeks to extend the time period specified in notification No. 31/2018-CT dated 06.08.2018 for availing the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

21. 30/2018-Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Seeks to insert explanation in an item in notification No. 11/2017 – Central Tax (Rate) by exercising powers conferred under section 11(3) of CGST Act, 2017.

22. 29/2018- Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Seeks to amend notification No. 13/2017- Central Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

23. 28/2018-Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

24. 27/2018-Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Seeks to amend notification No. 11/2017- Central Tax (Rate) so as to notify CGST rates of various services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

25. 26/2018-Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Exemption to central tax on supply of gold, silver or platinum by nominated agencies to registered persons.

26. 25/2018-Central Tax (Rate) - dated 31-12-2018 - CGST Rate

Seeks to further amend notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 to exempt GST on goods as per recommendations of the GST Council in its 31st meeting.

27. 24/2018 - dated 31-12-2018 - CGST Rate

Seeks to further amend notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 to change GST rates on goods as per recommendations of the GST Council in its 31st meeting

28. 04/2018 - dated 31-12-2018 - IGST

Integrated Goods and Services Tax (Amendment) Rules, 2018

29. 31/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to insert explanation in an item in notification No. 8/2017 – Central Tax (Rate) by exercising powers conferred under section 11(3) of CGST Act, 2017.

30. 30/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

31. 29/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

32. 28/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

33. 27/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Exemption to integrated tax on supply of gold, silver or platinum by nominated agencies to registered persons.

34. 26/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to further amend notification No. 2/2017-Integrated Tax (Rate) dated 28.06.2017 to exempt GST on goods as per recommendations of the GST Council in its 31st meeting.

35. 25/2018-Integrated Tax (Rate) - dated 31-12-2018 - IGST Rate

Seeks to further amend notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 to change GST rates on goods as per recommendations of the GST Council in its 31st meeting.

36. 30/2018 - dated 31-12-2018 - UTGST Rate

Seeks to insert explanation in an item in notification No. 11/2017 – Union Territory Tax (Rate) by exercising powers conferred under section 11(3) of CGST Act, 2017.

37. 29/2018 - dated 31-12-2018 - UTGST Rate

Seeks to amend notification No. 13/2017- Union Territory Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

38. 28/2018 - dated 31-12-2018 - UTGST Rate

Seeks to amend notification No. 12/2017- Union Territory Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

39. 27/2018 - dated 31-12-2018 - UTGST Rate

Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify UTGST rates of various services as recommended by Goods and Services Tax Council in its 31st meeting held on 22.12.2018.

40. 26/2018 - dated 31-12-2018 - UTGST Rate

Union Territory Tax (Rate) - seeks to exempt Union Territory tax on supply of gold, silver or platinum by nominated agencies to registered persons.

41. 25/2018 - dated 31-12-2018 - UTGST Rate

Seeks to further amend notification No. 2/2017-Union Territory Tax (Rate) dated 28.06.2017 to exempt GST on goods as per recommendations of the GST Council in its 31st meeting

42. 24/2018 - dated 31-12-2018 - UTGST Rate

Seeks to further amend notification No. 1/2017-Union Territory Tax (Rate) dated 28.06.2017 to change GST rates on goods as per recommendations of the GST Council in its 31st meeting.

Circulars / Instructions / Orders

GST

1. 80/54/2018-GST - dated 31-12-2018

Clarification regarding GST rates & classification (goods)

2. 81/55/2018-GST - dated 31-12-2018

Clarification regarding GST tax rate for Sprinkler and Drip Irrigation System including laterals

Customs

3. 54/2018 - dated 31-12-2018

Electronic Sealing-Deposit in and removal of goods from Customs Bonded Warehouses.

4. PUBLIC NOTICE No. 37/2018 - dated 30-10-2018

IGST Export Refunds - extension in SB005 alternate mechanism And revised processing in certain cases including disbursal of compensation Cess

5. PUBLIC NOTICE N0. 137/2018/ 30.10.2018 - dated 29-10-2018

IGST Export Refunds - extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess

Highlights / Catch Notes

GST

• New Year 2019: Key Updates and Resolutions for Goods and Services Tax Compliance and Regulation.

  Articles : New Year 2019! GST Resolution - Goods and Services Tax - GST
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• Manufacturer Faces Penalty for Failing to Pass GST Benefits, Issuing Incorrect Tax Invoices in FMCG Sector.

  Case-Laws - NAPA : Profiteering - manufacturers of Fast Moving Goods Consumer Goods (FMCGs) - Respondent had compelled them to pay additional GST on the increased prices though the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on - Penalty proceedings initiated.
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• Charitable and religious trusts selling items like books and CDs are classified as "business" under the CGST Act.

  Case-Laws - AAAR : Public charitable and religious trust - scope of business - The very fact that certain services have been carved out and given out a special treatment makes it clear that all trade and commerce transaction of selling books, statutes, CDs and DVDs etc. done commercially for consideration come within the broad ambit of ‘business’ under the CGST Act.
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Income Tax

• University Not Liable for TDS on Payments to Affiliated Colleges u/s 194J Due to Lack of Professional Services Evidence.

  Case-Laws - HC : Non-deduction of tax u/s 194J - in the absence of any material to establish that the affiliated colleges/centres were rendering services of professional or technical nature in the matter of conducting the University's examination, TDS liability does not arise.
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• Bank Report Validates Payment Credit, Satisfying Section 40A(3) Despite Uncrossed Demand Drafts in Court Case.

  Case-Laws - HC : Disallowance u/s 40A(3) - The Bank report would indicate that demand drafts were admittedly not crossed. However, the payments were credited into the accounts of the payees. Therefore, the object with which Section 40A(3) was promulgated stands satisfied with such material.
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• Penalty u/s 271(1)(c) Not Justified if Taxpayer Doesn't Appeal Due to Small Amount; No Admission of Guilt.

  Case-Laws - AT : Penalty u/s 271(1)(c) - merely because the assessee does not carry the matter in further appeal in view of the smallness of the amount involved, it does not mean that the assessee conceded to have either concealed the income or furnished inaccurate particulars thereof.
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• Revision Ordered u/s 263: AO's Inquiry Lapses on Section 57(iii) Claim Deemed Erroneous and Revenue-Prejudicial.

  Case-Laws - AT : Revision u/s 263 - it is a case of lack of enquiry particularly on the issue of allowability of the claim under section 57(iii) of the Act. Thus the order of the AO suffers from error so far as it is prejudicial to the interest of the revenue.
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• MAT Credit u/s 115JAA Includes Surcharge and Education Cess, Confirms Decision.

  Case-Laws - AT : Restriction of MAT credit - whether for the purposes of computing the MAT credit u/s 115JAA whether tax include surcharge and education cess or not? - Held Yes
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• Section 80AC: Mandatory Filing of Income Tax Return by Due Date to Claim Deductions u/s 80IA.

  Case-Laws - AT : Claim deduction u/s.80IA - the provisions under section 80AC requiring the assessee to furnish the return of income before due date specified under section 139(1) is mandatory and not directory.
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• Taxpayer's Off-Market Bond Transactions Permissible; Loss Disallowance Based on Speculation Invalid, Says Assessing Officer.

  Case-Laws - AT : Disallowance of loss of trading in bonds - The A.O. has not contradicted the claim of the assessee that there was no prohibition on carrying out off market transactions - No justification to disallow the loss on transactions on lands merely on doubt assumption basis.
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• Section 68: Non-resident Share Applicant's Funds Exempt from Indian Income Tax.

  Case-Laws - AT : Addition u/s 68 - creditworthiness of the creditor - share applicant was residing abroad during relevant time - the money brought into India by non-residents for investment or other purposes is not liable to Indian Income Tax.
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• AO to Average Valuations for LTCG u/s 50C of Income Tax Act: Assessee and DVO Inputs Required.

  Case-Laws - AT : LTCG - addition after invoking section 50C - AO directed to adopt fair market price of the relevant capital asset to be average of assessee’s and DVO’s valuation‘s issue
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Customs

• Customs Department Ordered to Allow Company to Restart Operations at Special Warehouse Under Strict Supervision by Chief Commissioner.

  Case-Laws - HC : Suspension of Company’s operations-at the special warehouse - The Customs Department is directed to allow forthwith the Company to carry on its business operations, of course under the strict supervision of the departmental officials, as the Chief Commissioner of Customs deems proper
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Corporate Law

• Government Cannot Deactivate DINs for Directors of Struck-Off Companies Without Meeting Rule 11, 2014 Conditions.

  Case-Laws - HC : Disqualification of directors - Directors associated with “struck off companies” - Government could not have deactivated the DINs allotted to the Directors under Section 154 of the said Act, except under the circumstances mentioned in Rule 11 of the said Rules of 2014.
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Service Tax

• Refund of Service Tax for Ministry of Defence Approved, But Interest on Delayed Payment Refund Denied.

  Case-Laws - AT : Refund of service tax paid - services provided to the Ministry of Defence - rejection on the ground of unjust enrichment - refund of tax paid allowed - however, refund of interest of paid on delayed payment of service tax denied.
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Central Excise

• Appellant Wins Area-Based Exemption for New Cosmetics and Homeopathic Drugs Under Notification 50/2003-CE Until 2020.

  Case-Laws - AT : Area Based Exemption - The appellant is entitled for all the new items namely cosmetics and homeopathic drugs medicaments for benefit of exemption Notification No. 50/2003-CE dated 10.06.2003 till 22.03.2020
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• Procedural Delays Cannot Deny Appellant Benefits; Procedural Lapse in LOP Amendment Recognized Without Impacting Entitlements.

  Case-Laws - AT : 100% EOU - the amendment in letter of permission (LOP) has granted to the appellant with the delay, therefore, merely on procedural of lapse benefit of notifications cannot be denied to the appellant
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• Postal Receipt Date Insufficient to Prove Declaration Content for Central Excise Exemption Filing.

  Case-Laws - HC : Area based exemption - proof of filing of declaration - The Postal Receipt may be relevant to assume that a letter was sent on 13.04.2005, but it falls short to prove the contents of the letter. The appellant has thus failed to discharge the initial onus cast on it.
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Case Laws:

• GST

• 2019 (1) TMI 25
  Public charitable and religious trust - scope of business - scope of supply - main object of the Appellant trust is to spread the knowledge of the Jain Dharam and advancement of teachings of Paramkrupaludev Shrimad Rajchandra - whether the activities carried out by them would fall under the definition of business as defined under the Section 2(17) of the CGST Act, 2017? - registration under the provisions of the CGST Act, 2017 and the MGST Act, 2017 - sale of spiritual products which are incidental and ancillary to main charitable object. Held that:- he definition of business under the CGST Act is wide enough to include trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activities. The term trade is a comprehensive term which covers the activity of buying, selling or exchanging goods or services. The terms trade and commerce by themselves mean the buying or selling goods or services between people. The charitable trust may be formed with the fundamental objectives of carrying out spiritual activity and salvation. But it also, at the same time, sells goods and services under the auspices of the trust. The trust sells various goods and services to the people desiring to buy them and such an activity by itself forms a part of the objective of the trust - The main activity or object of the trust includes trade and commerce and as the definition of business under the CGST Act includes the words trade and commerce it can be said that the appellant is engaged in supply of goods and services and is therefore liable to get itself registered. The appellant sells goods and services for consideration and its various activities come within the ambit of definition of supply - it is already held as how the appellant can be said to be engaged in the business. Therefore, the said supply of spiritual products like books, CDs and DVDs are in the nature of supply in the course of business. Specific exemption from GST is given to charitable institutions registered u/s.12AA of the IT Act, 1961. It can be gathered that the intention of the legislature is to tax all the activities of supply goods and services by charitable trust except those specifically exempted. This is with the background that charitable institutions qua their activities of charity do not lend themselves to any specific concession or exemption from the definition of supply or business or taxable person . The very fact that certain services have been carved out and given out a special treatment makes it clear that all trade and commerce transaction of selling books, statutes, CDs and DVDs etc. done commercially for consideration come within the broad ambit of business under the CGST Act. Ruling:- The decision in Advance Ruling No. GST-ARA-41/201718/8-48 dated 14.06.2018 [2018 (9) TMI 235 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] is upheld.

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• 2019 (1) TMI 24
  Detention of goods with vehicle - furnishing of bank guarantee - Held that:- Identical issue decided in the case of RENJI LAL DAMODARAN, DAMU & SONS SALES CORPORATION VERSUS STATE TAX OFFICER, KOTTARAKKARA AND ASST. STATE TAX OFFICER, KARUNAGAPALLY [2018 (8) TMI 1145 - KERALA HIGH COURT] - respondent authorities are directed to release the petitioner's goods and vehicle on his "furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.

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• 2019 (1) TMI 23
  Detention of goods with vehicle - Section 129 of the GST Act - Held that:- The petitioner-Company is a dealer with its registration in Tamil Nadu. When it wanted to comply with the statutory demand and get the goods released, the respondent authorities insisted that the petitioner should have a temporary registration, remit the amounts using that registration, and then get the goods released. The petitioner is disinclined to follow that procedure. It wants to remit the amounts using its own Tamil Nadu registration and have the goods released. The Government pleader took instructions from the authorities, and informed the Court that the petitioner's representative can approach the authorities with a request to remit the amounts. They will generate the challan in the petitioner's name using a temporary registration and hand it over to the petitioner's representative. That person, then, can approach the Bank, remit the amount, and produce the proof before the authorities. Thereafter, the authorities will release the goods - petition disposed off.

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• 2019 (1) TMI 22
  Profiteering - manufacturers of Fast Moving Goods Consumer Goods (FMCGs) - benefit of reduction in the rate of tax not passed - increase in the base price - contravention of the provisions of Section 171 of the CGST Act, 2017 - Held that:- The fact that the GST rates have been reduced vide Notification No. 41/2017-Central Tax (Rate) dated 14 11.2017, with effect from 15.11.2017 is not in dispute. The Respondent is a distributor who is duly registered under the above Act and hence the benefit of rate reduction was required to be passed on by him to the recipients as per the provisions of Section 171 of the CGAT Act, 2017 - From the perusal of the invoices dated 11.10.2017 and 30.11.2017 it is noticed that the Respondent had increased the base price of Garnier Nat Shade 3 from 24.41 (price charged prior to rate reduction) to 26.48 (price charged after rate reduction). Similarly from the perusal of Annexure-13 of the DGAP's Report it is clear that to retain the MRPs of all his products at pre-GST rate reduction the Respondent had increased the base prices of his products to the extent of GST rate reduction. It is established that out of the 388 products the base prices of 293 (259+34) products were increased by him inspite of the rate reduction to maintain the pre rate reduction prices. Accordingly the Respondent has charged increased base prices on the above products thus indulging in profiteering. Respondent has vehemently argued that he had no control on the fixing of base prices as well as the MRPs as both of them were fixed by the manufacturer M/S L'oreal India Pvt. Ltd. through it's software - Held that:- The discounts provided to the customers after GST rate reduction are required to be considered as the on going existing promotional schemes during the pre-GST rate reduction period. The argument of the Respondent that the prices were controlled by the manufacturer does not hold good in as much as he is registered supplier under the CGST/SGST Act, 2017 and is bound to follow the notification dated 14.11.2017 to pass on the benefit of GST rate reduction. The legal obligation imposed upon him cannot be .ignored only because he is not the manufacturer who controls the prices, as he is accountable as a supplier to pass on the benefit of GST rate reduction. There is no evidence to show that he had corresponded with the manufacturer for decrease in the base prices on account of the GST rate reduction. Hence it is apparent that the Respondent inspite of his legal obligation has enhanced the prices of all the 293 products and resorted to profiteering. It is also established from the above facts that the Respondent had issued incorrect invoices while selling all the above products to his customers as he had not correctly shown the basic prices which he should have legally charged from them. The Respondent had also compelled them to pay additional GST on the increased prices though the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on - It is also established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. But, a fresh notice may be given to him to explain why penalty should not be imposed on him. Decided against respondent.

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• 2019 (1) TMI 21
  Profiteering - supply of the product “Paint (AP Apex Classic WT 10 LT (HSN Code 3209)) - benefit of reduction in the rate of tax of GST at the time of implementation of the GST - contravention of provisions of Section 171 of the CGST Act, 2017 - Held that:- It is evident that the Respondent has increased the base price of the product from 1855.05/- to 1859.55/- resulting in an increase of 4.50/-. In this context, it is apparent that the post-GST price before discount has been reduced from 2159/- to 1927/-. Also, the discount offered has been reduced from 75.57/- to 67.45/- i.e. by 8.12/- and hence post-GST, there is increase in the base price of 4.50/-. The increase in the base price is on account of the reduction in the discount. It is also revealed that the reduction in discount doesn't amount to profiteering as the same was offered from his profit margin by the Respondent and doesn't not form part of the base price and therefore, the Respondent cannot be held guilty under Section 171 of the Act. Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 - application dismissed.

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• Income Tax

• 2019 (1) TMI 41
  Addition u/s 14A or 37 - strategic investments made by the respondent company in its subsidiary companies - Held that:- We notice that the assessee had made investments in its subsidiary companies and associated companies which were specially constituted as special purpose vehicle to execute the projects awarded by the local authorities. AO was of the opinion that the interest on the funds borrowed for making such investments would not be an allowable expenditure. The Tribunal relied upon and referred to the judgment of CIT Vs. Spencer & Co. Ltd.[2014 (2) TMI 237 - MADRAS HIGH COURT] and held that the interest on the borrowed capital were investments in shares utilizing borrowed capital for strategic business purpose, was an allowable expenditure. Without so stating, the Tribunal was essentially applying the principles laid down by the Supreme Court in case of S.A. Builders Ltd. Vs. CIT [2006 (12) TMI 82 - SUPREME COURT]

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• 2019 (1) TMI 40
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- No penalty is imposable under Section 271(1)(c) for the reason that at the time of initiating penalty proceedings or even at the time of issuing showcause notices for imposition of penalty, the Assessing Officer had not specified whether the penalty proceedings are on account of concealment of particulars or furnishing incorrect details / particulars. In the absence of the same being specified, the entire proceedings were held to be without jurisdiction. For the aforesaid conclusion, the impugned order of the Tribunal relied upon the order passed by its coordinate bench in the case of Shri. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] holding that the issue stands concluded in favour of the assessee.

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• 2019 (1) TMI 39
  Non-deduction of tax u/s 194J - Assessee-University conducts examinations through various colleges affiliated to it - amount so reimbursed by the Assessee- University to the affiliated colleges are in respect services of professional or technical experties - Held that:- Tribunal in considering the matter held that no doubt the payment of expenditure incurred by the affiliated colleges/centres is reimbursable but there is no involvement of professional or technical experties. The affiliated colleges/centres do not render any technical services in conducting of the examination. The Tribunal further observed that the revenue in the past and in the subsequent years has never raised such an objection. Thus, in the absence of any material to establish that the affiliated colleges/centres were rendering services of professional or technical nature in the matter of conducting the University's examination, we are of the opinion that the Tribunal has not committed any error of law in holding that the tax was not deductable on such reimbursement under Section 194J(b) - Decided in favour of assessee.

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• 2019 (1) TMI 38
  Proceedings u/s. 158BD initiated in order to disallow depreciation on assets leased to REPL - search conducted u/s 132 - difference between the regular assessment and the block assessment - Held that:- Once the Assessing Officer (or the searched person) was satisfied that any undisclosed income belonged to the Assessee, as in the present case, he would hand over the books of account, other documents or assets seized or requisitioned to the Assessing Officer of the present assessee who would than proceed under Section 158BC of the Act. Accordingly, even in case of the person other than searched person, upon finding of any income belonging to the person during search, the block assessment procedure had to be undertaken. As decided in COMMISSIONER OF INCOME-TAX VERSUS DR. M. KE MEMON [2000 (3) TMI 19 - BOMBAY HIGH COURT] regular assessment is to ensure that the assessee had not understated the income or has not computed excessive loss or has not underpaid the tax in any manner whereas what is assessed under Chapter XIVB is only the undisclosed income for the block period and not the income or loss of the previous year which is only done in the normal regular assessment under section 143(3). Tribunal was right in holding that proceedings u/s. 158BD ought to have been initiated in order to disallow depreciation on assets leased to REPL - decided against revenue Allowance of broken period interest - Held that:- Question (b) is covered by the Judgment of this Court in the case of CIT v/s. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT]. Since there is no dispute with respect to this, we do not find it necessary to give detail background of the issue and the decision of the Court in case of this very Assessee. This question is, therefore, not entertained Appeal admitted for consideration of the question (c)- “(c) Whether on the facts and circumstances of the case and in law, the Tribunal was right in holding that depreciation on the sale and lease back transaction of the assets to AEL should be allowed u/s.32 of the Income Tax Act,1961?”

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• 2019 (1) TMI 37
  Disallowance u/s 40A(3) - drafts have not been crossed - Held that:- The main purpose of crossing a demand draft is to ensure that the payment is cleared by means of an account, i. e. , the payment is deposited in the Bank Account of the person in whose favour the demand draft has been drawn. It ensures the payee receives the payment and it is routed through bank channels. In the facts of this case, both have been proved. The Bank report would indicate that demand drafts were admittedly not crossed. However, the payments were credited into the accounts of the payees. Therefore, the object with which Section 40A(3) was promulgated stands satisfied with such material. The only objection was as to why payments have not been made through crossed demand drafts. In fact, in its order, a question was asked as to why the payments were not made in crossed demand drafts. The same is answered by the assessee, who stated that, generally, suppliers require demand drafts for quick realisation. For purchasing the demand drafts normally ‘yourself cheque’ will be issued to the bankers. The Bank may not have crossed the demand draft. It did not come to his notice. Expecting a answer for a specific question as to why the demand draft has not being crossed, would not be appropriate. The Bank report would indicate that payees have received the said amounts with the concerned drafts, the finding of the Tribunal on this issue with regard to unsatisfactory answer given by the assessee falls into insignificance. The substantial question of law is answered by holding that the Tribunal was not justified in confirming the disallowance u/s 40A(3)- decided in favour of assessee

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• 2019 (1) TMI 36
  Eligibility for deduction u/s 10B - miscellaneous income and compensation was part of income for the purpose of computation of eligible profit - Held that:- In view of the undisputed fact that the Revenue had accepted miscellaneous income and compensation as part of the eligible profits for the purpose of computation of claim u/s 10B of the Act coupled with the concurrence of both the parties for the issue being restored to the file of the AO for verification, we restore the issue to the file of the AO with a direction to allow the claim of the assessee after due verification and also after duly appreciating the fact that similar income/s had been held to be includible in eligible profits in the preceding assessment years. Appeal of the assessee stands allowed for statistical purposes.

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• 2019 (1) TMI 35
  Assessee in default u/s.201(1) - TDS u/s 195 - TDS on AMC charges to Non Residents - Payments made for software annual maintenance charges and payments made for what is claimed as software license fees - application of "making available” clause in the Article defining Royalty and fees for included services, in the respective DTAA’s - Held that:- Considering the facts and circumstances of the case, we are of the opinion that the question whether assessee was liable to deduct tax on AMC charges to Non Residents requires a fresh look by the ld. Assessing Officer. We set aside the orders of the lower authorities on this issue remit it back to the file of the ld. Assessing Officer AO for consideration afresh in accordance with law. For payments made to license for software, without deducting tax at source - Commissioner of Income Tax (Appeals) had considered the payments made by the assessee to be Royalty for the license granted by the payees to the assessee for using the software. No examination has been done on the real nature software, whether it was firmware or embedded software or standalone software. The question whether the payments were Royalty or not hinges upon the nature of software supplied. Unless a close analysis is done on the purchases orders and invoices relating to the supplies made by M/s. JQ Network on the assessee, it is not logically possible to come to a conclusion on the nature of payments effected by the assessee. In the circumstances, the question whether the payments effected by the assessee to JQ Network would constitute Royalty in our opinion also requires a fresh look by the ld. Assessing Officer. We therefore set aside the orders of the lower authorities on this issue also and revert it back to the file of the AO for consideration afresh in accordance with law - Appeal of the assessee allowed for statistical purposes.

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• 2019 (1) TMI 34
  Bogus long term capital gain on shares - addition u/s 68 - claim of long term capital gain exemption u/s 10(38) denied - addition made u/s 69C - Held that:- Purchase and sale of shares are documented and exhibited. Sale of shares are carried out in BSE at the prices prevailing in the market which are duly supported by contract notes issued by the broker. The entire transactions have been discarded by the Revenue authorities because the BSE has suspended trading in shares of Turbotech Engineering Pvt Ltd in January 2015. The undisputed fact is that the assessee had sold the shares in the month of July and September 2013, therefore, any action taken in 2015 would not affect the transactions done in 2013. Moreover, neither the SEBI nor the BSE has nullified the transactions done in 2013 in the scrip of Turbotech Engineering Pvt Ltd. Merely because some market players were doing clandestine activities in some scrips in the stock market would not make genuine transactions bogus. Merely because in the report of investigation wing, Kolkata name of Turbotech Engineering Pvt Ltd is mentioned would not make genuine transaction bogus - no direct evidence to demonstrate that the assessee was one of the direct beneficiaries of the accommodation entries provided by the company. Considering all no merit in the impugned additions - allow claim of long term capital gain exemption u/s 10(38) and delete the additions made u/s 69C of the Act. - decided in favour of assessee

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• 2019 (1) TMI 33
  Penalty u/s 271(1)(c) - addition u/s 40(a)(ia) in respect of provision made or the disallowance of corporate membership subscription for 9 years in advance - Held that:- When the assessee had revealed all the facts and the allegation is that in spite of the view of the auditors that since tax had not been deducted at source on some amount, the details of which are well furnished and the assessee entertained an information that the year end provision for expenses which are reversed at the beginning of the next year are not liable to deduction at source, such amounts were prima facie inadmissible u/s 40(a)(ia). This is a debatable issue. When all such material is available before the AO with two views expressed and the AO took one of such views then where is the question of concealment of income or furnishing of inaccurate particulars thereof? Law does not say that wherever the AO disallow any claim, penalty should invariably be levied. CIT(A) is perfectly justified in placing reliance on the decision of the Hon’ble Apex Court in the case of Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] Addition of corporate membership payment - CIT(A) found that it is not as if the amount was claimed fraudulently without actual payment but it was onetime payment for a period of 10 years and if the ingredients of Section 37(1) are examined, such an expenditure cannot be denied - Held that:- We are in agreement with the observation of the learned CIT(A) that it is a matter of difference of opinion between the assessee and the AO in so far as the advance nature of the payment is concerned and merely because the assessee does not carry the matter in further appeal in view of the smallness of the amount involved, it does not mean that the assessee conceded to have either concealed the income or furnished inaccurate particulars thereof. When there cannot be any penalty under law, merely because the assessee does not prefer further quantum appeal, it does not create jurisdiction for the AO to levy the penalty. - decided against revenue.

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• 2019 (1) TMI 32
  Disallowance u/s 14A resulting an impact on the book profit under section 115JB - MAT - Held that:- In the present case there is no addition made under section 14A. This is an additional aspect. Hence, facts in the present case rather on better footing than in the case of Gujarat Flurochemicals Ltd.[2018 (8) TMI 857 - ITAT AHMEDABAD]]. Otherwise there is no disparity on the issue. The Tribunal in the case of Gujarat Flurochemicals (supra) held that the amounts disallowed under section 14A r.w. rule 8D do not deserves to be added back to the book profit for consideration under section 115JB. The question has been replied in favour of the assessee, and hence, it could not be added back. Similar view has been taken in the case of Torrent Cable Ltd. [2018 (6) TMI 743 - ITAT AHMEDABAD]. Therefore, respectfully following order of the Coordinate Bench (where both of us are party to the earlier orders) we do not find any merit in this appeal of the Revenue. - Decided in favour of assessee.

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• 2019 (1) TMI 31
  Revision u/s 263 - allowability of the claim under section 57(iii) - order erroneous and prejudicial to revenue - Held that:- The details revealed that the assessee has received the interest @ 12% from M/s. Vishal Agencies, the partnership firm as against the interest charged by the same firm from the assessee @ 18%, hence there is a difference of 6% in the interest received and paid by the assessee. All these aspects were not even examined by the AO. There is no bar for considering the audit objections by the ld. Pr. CIT if the audit objection reveals certain relevant and crucial facts about the allowability of the claim. Therefore, we do not find any substance or merit in the contention of the ld. A/R on this point as it is clear that it is a case of lack of enquiry particularly on the issue of allowability of the claim under section 57(iii) of the Act. Thus the order of the AO suffers from error so far as it is prejudicial to the interest of the revenue. Hence CIT has rightly invoked the provisions of section 263 and directed the AO to conduct a proper enquiry on this issue. As regards the other issues raised by the ld. Pr. CIT in the show cause notice, those were not specifically discussed in the impugned order as the assessee explained some of the issues which were factually found to be correct. Accordingly, we restrict the fresh adjudication of the matter only on the issue of allowability of the claim under section 57(iii) of the Act, to that extent the impugned order of Pr. CIT is upheld. Following the order in the case of Shri Naresh Agarwal [2018 (8) TMI 1756 - ITAT JAIPUR] we uphold the impugned order of the CIT on the issue of allowability of the claim under section 57(iii) of the Act. - Decided against assessee.

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• 2019 (1) TMI 30
  Restriction of MAT credit - whether for the purposes of computing the MAT credit u/s 115JAA whether tax include surcharge and education cess or not? - Held that:- In the instance case, as per the order of the AO passed u/s 154 dated 31.3.2010 for AY 2010-11, it has been stated that the assessee company has paid MAT u/s 115JB amounting to 40,15,518 and given that tax under normal provisions comes to 29,70,947, the MAT credit of 10,44,571 is allowed to be carried forward u/s 115JAA of the Act. Further, in view of explanation 2 to section 115JB, there is no dispute that the tax includes surcharge and education cess. In any case, the decision of the Hon’ble Calcutta High Court in case of Srei Infrastructure Finance Ltd [2016 (8) TMI 967 - CALCUTTA HIGH COURT] supports the case of the assessee company. - decided in favour of assessee.

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• 2019 (1) TMI 29
  Claim deduction u/s.80IA - income derived from power generation using wind energy - return filled beyond the due date for filing the return u/s 139(1) - mandation of filling return of income on time - Held that:- Referring to Special Bench of the Tribunal in the case of M/s. Saffire Garments [2012 (12) TMI 193 - ITAT RAJKOT] we hold that the provisions under section 80AC requiring the assessee to furnish the return of income before due date specified under section 139(1) is mandatory and not directory. In view of the above discussion and considering the facts and circumstances of the case, we do not find any error or illegality in the orders of authorities below. Consequently, the appeal by the assessee is dismissed.

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• 2019 (1) TMI 20
  Disallowing deduction u/s.35(2AB) - absence of Form No.3CL by the DSIR - expenditure on scientific research and in-house research and development facility which is 200% of actual expenditure - Held that:- Rule-6(7A)(b) of the Rules specifying the prescribed authority and conditions for claiming deduction u/s.35(2AB) has been amended by the Income Tax (10th Amendment) Rules, 2016 w.e.f. 1.7.2016, whereby it has been laid down that the prescribed authority, i.e., DSIR shall quantify the quantum of deduction to be allowed to an Assessee u/s.35(2AB). Prior to such substitution, the above provisions merely provided that the prescribed authority shall submit its report in relation to the approval of in-house R & D facility in Form No.3CL to the DGIT (Exemption) within 60 days of granting approval. Therefore prior to 1.7.2016 there was legal sanctity for Form No.3CL in the context of allowing deduction u/s.35(2AB). Prior to 1.7.2016 Form 3CL had no legal sanctity and it is only w.e.f 1.7.2016 with the amendment to Rule 6(7A)(b) of the Rules, that the quantification of the weighted deduction u/s.35(2AB) of the Act has significance. In the present case there is no difficulty about the quantum of deduction u/s.35(2AB) of the Act, because the AO allowed 100% of the expenditure as deduction u/s.35(2AB)(1)(i) as expenditure on scientific research. Deduction u/s.35(1)(i) and Sec.35(2AB) are similar except that the deduction u/s.35(2AB) is allowed as weighted deduction at 200% of the expenditure while deduction u/s.35(1)(i) is allowed only at 100%. The conditions for allowing deduction u/s.35(1)(i) and under Sec.35(2AB) are identical with the only difference being that the Assessee claiming deduction u/s.35(2AB) should be engaged in manufacture of certain articles or things. It is not in dispute that the Assessee is engaged in business to which Sec.35(2AB) applied. The other condition required to be fulfilled for claiming deduction u/s.35(2AB) is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of India (DSIR). It is not in dispute that the Assessee in the present case obtained approval in Form No.3CM as required by Rule 6 (5A) of the Rules. The deduction u/s.35(2AB) ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific research. We hold and direct accordingly and allow the appeal of the Assessee.

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• 2019 (1) TMI 19
  Rectification of mistake - time limit for filing of Miscellaneous Petition - Held that:- The time limit for filing of Miscellaneous Petition stands ended by 30.09.2016 since the Revenue filed the present petition on 06.04.2017, which is clearly beyond the time limit prescribed under the Act. Therefore, we are of the considered opinion that the petition filed by the Revenue before this Tribunal is not maintainable. Accordingly, Miscellaneous Petition filed by the Revenue is dismissed.

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• 2019 (1) TMI 18
  LTCG - addition after invoking section 50C - challenge to the DVO’s valuation - quantification of depreciation - Held that:- It is an unadmitted fact that the assessee had claimed the said factors to be having 10%, 15%, 10% , 5% and 25% depreciating value on the relevant capital asset. The DVO accepted the former four issues to the extent of 3% in first and 3rd , 2% each qua second and 4th whereas 5th issue of unauthorized structures stands rejected. It is therefore more a case of quantification of the said depreciation factors in the former four issues only. The authorities below have gone by this tribunal former remand order (supra) in rejecting the assessee plea to this effect. We do not find any merit in the same as the said issue of quantification was never adjudicated in remand directions earlier. It appears that there is a lot of difference between assessee’s claim of quantification vis-à-vis as that accepted by the lower authorities. It ranges between 3 to 10% qua 1st and 3rd aspects, going as high as i.e. 15% and 2% qua the second aspect of large land size and 5% and 2% qua the fourth aspect of sloping ground. We therefore deem it appropriate to treat this issue to conclude that larger interest of justice would be met in case the AO is directed to adopt fair market price of the relevant capital asset to be average of assessee’s and DVO’s valuation‘s issue - Appeal of the assessee is partly allowed in above terms.

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• 2019 (1) TMI 17
  Disallowance of expenses incurred for the project after 15.04.2008 - assessee has booked total expenditure incurred for the project @76.46% for the current financial year and the balance expenses representing 23.54% has been allocated to Work-in-progress - Held that:- Once, the project has been complete in all respect and the authorities have issued Occupancy Certificate on being satisfied with the completion of the work, then the assessee cannot claim that it has incurred such a huge expenditure for carrying out further work in the project. Although, the assessee claimed to have incurred various expenditure like POP work, installation of grills 13,37,447/- between 16.04.2008 and 10.06.2008 i.e. the date of partial Occupancy Certificate obtained from the competent authority. The assessee claims that it has filed necessary evidence before the Assessing Officer to justify those expenses. We find that although the assessee has obtained completion certificate from its Architect on 15.04.2008, what is relevant is the completion certificate obtained from the competent authority i.e. CIDCO on 10.06.2008. Therefore whatever expenditure has been incurred between 16.04.2008 and 10.06.2008 needs to be allowed, if the assessee substantiated incurring various expenses for the work stated to be carried out in the project. Hence, we direct the AO to call for necessary enquiries in the light of the claim along with necessary evidence and if the Assessing Officer find that the assessee has substantiated expenses incurred with necessary evidences, then the Assessing Officer is directed to allow the expenses incurred between 16.04.2008 and 10.06.2008 of 13,37,447/. Disallowance of interest - Held that:- Once the Assessing Officer has accepted the fact that interest has been paid after deducting applicable TDS, then there is no reason for the Assessing Officer to disallow interest paid for the current financial year. CIT(A) after considering the relevant facts has directed the Assessing Officer to verify whether interest for the year has been really paid or only provision has been made in the books of account. We do not concur with the findings of the CIT(A) in so far as A.Y. 2009-10 is concerned for the reason that the treatment of interest in the books of account is irrelevant whether the same has been paid or provided in the books of account. What is relevant is the assessee has paid interest after deducting necessary TDS applicable as per law. In this case, the lower authorities have not disputed the fact that the assessee has paid interest after deducting applicable TDS. We are of the considered view that the Assessing Officer has erred in disallowing interest for A.Y. 2009-10 and, hence, we direct him to allow interest paid for A.Y. 2009-10. Disallowance of expenses incurred by the Director on behalf of the company - Held that:- AO has disallowed expenses incurred by the Director on behalf of the company without assigning any reasons and concluded that the assessee has not filed any details in respect thereof. But, it is the claim of the assessee that it has filed necessary details in respect of expenditure incurred by the Director and reimbursed by the company. The facts are contradicting each other. Therefore, we are of the considered view that the issue needs to be re-examined by the Assessing Officer in the light of claim of the assessee. Hence, we set aside the issue to the file of the Assessing Officer and direct him to call necessary inquiries and take decision in accordance with law. Reduction of certain expenses from Work-in-progress while completing the income tax assessment for A.Y. 2010-11 - AO has disallowed certain expenses on the basis of project completion ratio as per which it has disallowed 76.46% of expense for the current financial year and remaining 24.54% has been reduced from Work-in-progress - Held that:- AO has disallowed expenses pertaining to the project completed during the current year and balance amount has been directed to be reduced from the Work-in-progress. No doubt the AO has disallowed certain expenses for current financial year for the reasons stated in the assessment order, but giving directions to reduce the remaining part of expenses while completing the assessment for A.Y. 2010-11 is beyond the scope of the Assessing Officer. Whether a particular expense is allowable or not and it needs to be excluded from the value of Work-in-progress, has to be decided while completing assessment for A.Y. 2010-11. Therefore, we are of the considered view that the Assessing Officer erred in giving directions to reduce remaining part of the expenses from Work-in-progress while completing assessment for A.Y. 2010-11. Hence, we set aside the direction given by the Assessing Officer for A.Y. 2010-11. - Appeal filed by the assessee is partly allowed for statistical purpose.

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• 2019 (1) TMI 16
  Addition u/s 68 - creditworthiness of the creditor is not proved - share applicant was residing abroad during relevant time - AO noted that the investment in the company remained unproved - money brought into India by non-residents for investment - Held that:- It is noted from the available records that Shri Jagjit Singh Gabha r/o of 55, Woodlands Road, Southhall UBI, 1 EJ, London having Passport No. 508223849 had paid a sum of 85.23 lacs through his Saving Bank A/c No; 15621060000188 held with HDFC Bank, Mansarovar Garden, New Delhi towards share application money to M/s. Shree Nath Heritage Liquor Pvt Ltd. having its registered office at G-1/100, RIICO, Industrial Area, Jhunjhunu (Raj) during the Assessment Year 2013-14. These payments were made to the assessee company through RTGS (PBP 8). It is noted that money had been brought into India through banking channel. Taking into consideration the above facts, circumstances of the case, case laws relied on by the assessee and the CBDT Circular No. 05 dated 20-02-1969, we find that the money brought into India by non-residents for investment or other purposes is not liable to Indian Income Tax. In this view of the matter, the Ground of the assessee is allowed.

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• 2019 (1) TMI 15
  Disallowance of loss of trading in bonds - A.O. was of the view that trading transactions in securities has not been effected for commercial purpose but to create loss with a view to reduce tax liability. - non-compliance of the summons - Held that:- A.O. has neither fully investigated nor brought any material on record to prove that the transactions are bogus. It is also explained that the assessee has squared up the deal which otherwise would have resulted in locking up of huge fund for a longer time and particularly in view of the fact that such long term fund was not available at the disposal and by non-honoring he would have been declared insolvent. The assessing officer has not examined/investigated the transactions in order to prove that the transactions were bogus and not genuine. The A.O. has not contradicted the claim of the assessee that there was no prohibition on carrying out off market transactions. The assessee has already filed a compliance letter dated 22/02/2016 (PBP 37) by the submitting the requisite details. For alleged non-compliance of the summons, the A.O. has neither issued any show cause notice nor imposed penalty u/s. 272A(l)(c) of the Act. The assessee has also provided his new address where he was presently staying for communication to the A.O. He has also requested for reasonable and adequate time for making compliance. We observe from the material placed on record that the A.O. has not further indicated the need for any personal examination of the assessee. The loss on the trading of the lands was occurred before the earning of profit on the sale of land by the assessee. We find that as per material on record the loss in trading of lands was occurred on 01/01/2013 whereas the profit on the sale of land was occurred on sale of land 24/01/2013. Considering the contention of the ld. counsel that it is open market trade and the price is as agreed upon by the purchaser and sellers as per their requirement based on different factors like need of liquidity of funds etc., we observe that the A.O. has raised a number of doubt about the genuineness of above cited transactions but has not proved with supporting materials that the transactions were bogus - A.O. has failed to establish with relevant material that the impugned transactions in the sale/purchase of shares were not genuine. No justification in the decision of Ld.CIT(A) to disallow the loss on transactions on lands merely on doubt assumption basis, therefore the appeal of the assessee is allowed

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• 2019 (1) TMI 14
  Application for condonation of delay - Delay of 1174 days - Held that:- Assessee has not given any plausible reasons for condoning the huge delay of 1174 days in the said Application. Assessee has also not filed sufficient evidence as per the averments made by the assessee in the Application for condonation of delay. Therefore, we are unable to condone the huge delay of 1174 days in filing the present Appeal. Hence, the Appeal filed by the Assessee is dismissed being time barred. - decided against assessee.

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• 2019 (1) TMI 13
  Deduction u/s.10B - Disallowance of claim for failure to fulfill the conditions specified in the said section - in response to the alternate claim of deduction, CIT(A) allowed the alternate claim of deduction u/s.10A and confirmed the AO’s decision in rejecting the claim of deduction u/s.10B - Held that:- It is undisputed fact that the grounds raised by the assessee revolves around the absence of ground on the claim of deduction u/s.10A of the Act. It is also undisputed fact that the assessee raised this alternate claim of deduction u/s.10A of the Act before the CIT(A) who eventually allowed the same rejecting the assessee’s original claim of deduction u/s.10B of the Act. Further, we find the assessee is not legally correct in stating that there is no need for referring to the alternative claim issue u/s.10A of the Act as the decision of the CIT(A) is not final legally. Assessee should have reasonably anticipated the existence of the appeal by the Revenue when the alternative claim is allowed and against the Revenue. We are of the view that Ld. Counsel for the assessee failed in not making mention to the likely existence of appeal by the Revenue. Coming to the expunging of the last line Para No.10 of our order, we find that it is a fact that there is no ground at all on the claim u/s.10A of the Act. Thus, while making a mention about the alternate claim, we find there is an expression of word “clear” erroneously entered into the said sentence and the same should constitute a mistake apparent from the record. Therefore, we are of the opinion that the word “clear” appearing in the last sentence of Para No.10 of the order of Tribunal should be deleted. AO is directed accordingly. Accordingly, the Miscellaneous Application filed by the assessee is disposed pro tanto.

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• Customs

• 2019 (1) TMI 12
  Maintainability of petition - suspension of Company s operations-at the special warehouse - it was alleged that the Company has violated the Special Warehousing License conditions and it has suppressed or manipulated the sales data - Should the warehouse and the duty-free shops in the International Airport remain closed until the departmental investigation or inquiry concludes? - Held that:- Indeed, investigation is a matter of integrity and it must inspire confidence even in the one subjected to that investigation. Here that is lacking. I entirely leave aside the Company s version. Even going by the Airport Authority s version, the allegations of bias, predetermination, and prejudice are writ large. When a person alleges bad faith he must implead the persons facing that allegation as a party to the proceedings. It is to enable him to answer the charge. Courts have to be slow in drawing conclusions for upholding the allegations of bad faith. Only where the facts lead to inevitable inferences supporting the charge of bad faith should the courts record a finding on that count. But before that, it must also hear the affected person. The investigation that has so far taken place need not be scuttled. But from now on wards, until the inquiry or investigation concludes, the Chief Commissioner of Customs will entrust the matter to some other official than Mr. Sumit Kumar, the Commissioner of Customs. The Customs Department is directed to allow forthwith the Company to carry on its business operations, of course under the strict supervision of the departmental officials, as the Chief Commissioner of Customs deems proper - Then, in the interest of investigative fairness, the Chief Commissioner of Customs will entrust to some other officer than the 10th respondent the task of completing the investigation and taking all other consequential measures, but by using the same material so far the Department has gathered. Petition disposed off.

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• 2019 (1) TMI 11
  Revocation of CHA License - forfeiture of security deposit - imposition of penalty - principles of natural justice - case of petitioner is that the respondent is not justified in holding that the petitioner is guilty of such charge also, without informing the petitioner about his disagreement on the enquiry report in respect of such charge and and without calling upon the petitioner to file his objection on such disagreement - Held that:- The respondent neither disclosed his mind or decision of disagreement with the findings of the Inquiry Officer with regard to the charge made in respect of Regulation 11(m) nor called upon the petitioner to file their objection with regard to such disagreement - Needless to say that when the charges are levelled and an enquiry is conducted based on such charges, the enquiry report filed by the Inquiry Officer is a crucial document and if the disciplinary/punishing authority intends to disagree with the whole or any of the findings rendered by the Inquiry Officer, in respect of the whole or any of the charges, he has to necessarily put the person, against whom such charges are made, on notice, by specifically expressing his disagreement and call upon such person to give objection on such disagreement. The petitioner should be given an opportunity to place their objections as against the disagreement of the respondent in respect of the charge levelled in relation to Regulation 11(m) - petition allowed.

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• 2019 (1) TMI 10
  Service of SCN - though it is stated that the show cause notice was issued under Section 124 of the Customs Act, 1962, a file number has been given, but there was no averment or proof of service of such show cause notice on the assessee - Held that:- Tribunal had given sufficient opportunity to the Department including the Directorate of Revenue Intelligence to produce proof that the show cause notice was served on the assessee. The Tribunal, in paragraph 3 of the impugned order, recorded the submission of the authorized representative of the Department appeared before the Tribunal that no show cause notice has been issued to the respondent – assessee in the subject proceedings and this submission was made after due instructions were given and after making enquiries with the Department. We cannot exercise our power under Section 130 of the Customs Act, 1962 to re-appreciate the factual finding finally decided by the Tribunal, the last Authority, which can appreciate the factual matrix - appeal dismissed.

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• 2019 (1) TMI 9
  Service of notice - Detention and sale of goods - import of old and used photocopiers - levy of redemption fine and penalty - case of Petitioner is that the Original-In-Order No.7575/2008, dated 27.03.2008 was not served on the Petitioner before passing the impugned detention notice - Held that:- It has been specifically stated in the counter affidavit that through a letter dated, 09.04.2007, The Respondents had informed the Petitioner about the said order. Since no reply was received from the Petitioner, personal hearings were given on 17.2.2007, 20.12.2007 and 24.12.2007, by letter dated, 12.12.2007. However, the Petitioner did not appear for the personal hearing on the said dates. Thereafter, the Original-in-Order, dated 27.03.2008 was passed. The said order sent by the Respondent Department to the Petitioner was returned undelivered, with an endorsement 'left' on 17.04.2008 and consequently, the impugned detention notice came to be passed, in terms of the provisions of the Act. The Petitioner failed to receive the postal communication to evade the payment of dues - Further, there is no bona fide reason stated by the Petitioner in the affidavit for refusal of receipt of the said Original-in-Order, dated 27.03.2008. The contention of the learned counsel for the Petitioner that there was no proper service of notice before passing the impugned detention notice, cannot be accepted - petition dismissed.

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• 2019 (1) TMI 8
  Non compliance of pre-deposit - exemption under N/N. 16/2000-Cus dated 01/03/2000 (Sno. 80) - manufacture of intravenous amino acids which contains carbohydrates and electrolytes - Held that:- Since the appeal was dismissed by the Ld. Commissioner (A), for non compliance of pre-deposit and not decided the merit of the case, the matter needs to be remitted back to the Commissioner (A) - Appeal allowed by way of remand.

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• Corporate Laws

• 2019 (1) TMI 27
  Disqualification of directors - Directors associated with struck off companies - disqualification as contemplated under Section 164(2)(a) - retrospectivity of provisions of Section 164(2)(a) - deactivating DINs (Directors Identification Numbers) - effect of Resignation of director - directors discharging his statutory liabilities under the Act - Held that:- once an individual, who is intending to be the Director of a particular company is allotted DIN by the Central Government, such DIN would be valid for the lifetime of the applicant and on the basis of such DIN he could become Director in other companies also. Hence, if one of the companies in which he was Director is struck off , his DIN could not be cancelled or deactivated as that would run counter to the provisions contained in the Rule 11, which specifically provides for the circumstances under which the DIN could be cancelled or deactivated.In that view of the matter, the Court is of the opinion that the action of the respondents in deactivating the DINs of the petitioners - Directors along with the publication of the impugned list of Directors of struck off companies under Section 248, also was not legally tenable. Section 164(2) of the Act of 2013, which had come into force from 1.1.2014 would have prospective and not retrospective effect. The defaults contemplated under Section 164(2)(a) with regard to non-filing of financial statements or annual returns for any continuous period of three financial years would be the defaults to be counted from the financial year 2014-15 only and not 2013-14. The respondents could not have treated the Directors as disqualified/ineligible for a period of five years from 1.11.2016 to 1.11.2021, while publishing the impugned list under Section 248 of the Act of 2013.Even if the Registrar removes the name of a company from the register of companies, and even if such company would stand dissolved under Section 248, the statutory liabilities/obligations of such struck of company and its Directors would still remain to be discharged, in view of Section 250 of the said Act of 2013. The respondents could not have deactivated the DINs allotted to the Directors under Section 154 of the said Act, except under the circumstances mentioned in Rule 11 of the said Rules of 2014. In view of the above, the impugned list dated 12.9.2017 of the Directors associated with the struck off companies under Section 248 published by the respondent No.1 is quashed and set aside. The respondents are directed to activate the respective Director Identification Numbers of the petitioners forthwith, if not activated so far. However, it is clarified that the respondents shall be at liberty to take legal action against the petitioners for any statutory default or non-compliance, in accordance with law.

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• Insolvency & Bankruptcy

• 2019 (1) TMI 28
  Corporate insolvency process - Orders passed by the Adjudicating Authority were ex-parte - Adjudicating Authority did not serve Notice on the Corporate Debtor and violated principles of Natural Justice - whether we should send back the matter for want of such procedure being followed by the Adjudicating Authority? - Held that:- Looking to the admitted facts in this matter and where we find that there is no dispute regarding the amount due and as we find that the Appellant is unable to demonstrate that before Section 8 Notice was issued any dispute existed, we find no propriety in sending back this matter to the NCLT. The Appellant in spite of having Notice and knowledge of the proceeding cannot sit on the hedge to take advantage of the technical requirement of Adjudicating Authority sending a Notice through its mechanism. The Appellant had sufficient Notice and still chose not to appear before the Adjudicating Authority. We do not find that remitting back the matter will serve any purpose. The application has been rightly admitted by Adjudicating Authority. 8

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• FEMA

• 2019 (1) TMI 26
  Penalty under FEMA - Tribunal jurisdiction allowing waiver of deposit of penalty - Tribunal directed the appellant to deposit a sum of 12,00,000/-, which would amount to 25% out of the total amount ordered by the adjudicating authority by way of penalty - Held that:- We are of the opinion that the direction already given in this appeal, dated 05.09.2018, would safeguard the interest of the Department, since the appeal itself has been directed to be listed by the Appellate Tribunal on 27.02.2019. Thus the appeal stands allowed and the order passed by the Tribunal is modified to the effect that the appellant shall pay a sum of 5,00,000/-, which the appellant has already paid. Consequently, the remaining amount of penalty, levied on the appellant, shall remain stayed till the disposal of the appeal by the Appellate Tribunal.

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• Service Tax

• 2019 (1) TMI 7
  Refund of service tax paid - services provided to the Ministry of Defence - rejection on the ground of unjust enrichment - Held that:- As per Section 11B(2)(e), the person who has borne the tax, can file the refund claim. Admittedly, this refund claim has been filed by the appellant on persuasion of the service recipient vide letter dt. 17.10.2016 - the service recipient has directed the appellant to file refund claim on their behalf under section 11B(2)(e) of the Central Excise Act, 1944. In these circumstances, the refund of the service tax paid by the appellant for which no service tax is payable, the appellant is entitled to file the refund claim on behalf of service recipient. As the appellant has paid the said amount of the service tax from the service recipient and as per the request of the service recipient, the same is required to be deposited in the account of service recipient. Therefore, the said refund is to be given to the service recipient only. Refund of interest paid by them on late payment of the service tax - Held that:- In the application of refund, the appellant has not claimed the refund of any interest; therefore, refund claim of interest cannot be entertained at this stage - further, at the time of payment of service tax with a delay, the appellant was required to pay service tax. In these circumstances also, the appellant can not claim the refund of interest. Appeal allowed in part.

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• Central Excise

• 2019 (1) TMI 6
  Area based exemption - proof of filing of declaration - exemption from payment of Central Excise under the Notification No. 50/03-CE, dated 10.06.2003 - whether the instant appeal raises a substantial question of law for adjudication by this Court? Held that:- Whether the appellant filed the 2nd Declaration on 13.04.2005 or on 13.05.2005 , is purely a question of fact. There is no gainsaying that an Exemption Notification ought to be construed strictly and the burden of proving its applicability lies on the assessee so as to establish that its case falls within the parameters of the exemption clause - Whosoever therefore seeks the benefit of exemption must always prove its admissibility. The appellant was obliged to establish that it had actually applied for the benefit of exemption under the Notification dated 10.06.2003 through 2nd Declaration filed on 13.04.2005 or that such a Declaration was available in the office of Assistant Commissioner, Central Excise. The appellant has miserably failed to discharge such onus. A plain reading of the Grounds of Appeal reveals that even the appellant was not sure about the actual date of filing of alleged 2nd Declaration, as the date of filing such Declaration claimed is 13.04.2005 whereas in the later part comprising Grounds of Appeal , it is stated to be dated 13.05.2005 . The Postal Receipt may be relevant to assume that a letter was sent on 13.04.2005, but it falls short to prove the contents of the letter. The appellant has thus failed to discharge the initial onus cast on it. Such like disputes are essentially questions of fact and cannot be treated as substantial question of law for the purpose of maintainability of this appeal. It is well settled that substantial question of law would mean-of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with---technical, of no substance or consequence, or academic merely - thus, whether a party fairly disclosed the facts or suppressed or gave selective information, too are surely questions of fact and per se does not give rise to substantial question of law. Appeal dismissed.

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• 2019 (1) TMI 5
  Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - new products added by installing fresh plant machinery i.e. cosmetics and homeopathic drugs medicaments - exemption w.e.f. 04.05.2017 till 22.03.2020 allowed or not - denial of exemption on the ground that the appellant has established a new unit with new plant and machinery to manufacture totally different products - CBEC circular no. 939/29/2010 dated 22.12.2010 - no SCN was issued to the appellant to deny the exemption sought by the appellant. Held that:- On going through the said circular, we find that the notification do no place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cutoff date and during the exemption period of ten years - Admittedly, the appellant has manufactured new products by addition of plant and machinery, therefore, the items sought to be added by the appellant in their exemption are covered by the CBEC Circular dated 22.12.2010 and the circular issued by the CBEC is binding upon the adjudicating authority. CBEC circular dated 22.12.2010 is binding on Ld. Commissioner and as per the said circular, the appellant is entitled to add new plant and machinery and he can manufacture of new products in terms of Notification No, 56/2003-CE dated 10.06.2003. The ld. Commissioner in the impugned order has observed that the appellant is having another unit and exemption to that unit has been expired on 30.04.2017, therefore, in the guise of addition of new items, the appellant sought addition of the new items - the said observation made by the ld. Commissioner is only assumptive and presumptive as the another unit of the appellant is still in existence. Although, the exemption has been expired but unit is still functionary, therefore, it cannot be said that the unit no. 1 has been transferred to the present unit i.e. Appellant and in the guise of the addition of new products, the appellant is seeking exemption for goods manufactured by the unit no. 1. Further, no show cause notice has been issued to the appellant to deny the exemption sought by the appellant, which would enable to file their counter to the allegation for denial of exemption to newly manufactured item - the order of denial of exemption to new products is bad in law. The appellant is entitled for all the new items namely cosmetics and homeopathic drugs medicaments for benefit of exemption Notification No. 50/2003-CE dated 10.06.2003 till 22.03.2020 - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 4
  100% EOU - Demand of Customs duty as well as Central Excise duty - procurement of inputs without payment of duty and has been used in export of goods without any permission from Development Commissioner to procure the said inputs - Held that:- In this case the appellant was having the 100% EOU to manufacture of said products vide LOP dated 22.11.2004. All the products exported by the appellant have been allowed finally by Development Commissioner vide its order dated 21.03.2017. In the case of Dendyal Magasvargiya Sahakari Soot Frini Ltd. [2014 (8) TMI 746 - CESTAT MUMBAI] this Tribunal that accrued vested right cannot be taken away merely because there is a delay in issuing the letter of permission by the Development Commissioner. In the present case, the amendment in letter of permission (LOP) has granted to the appellant with the delay, therefore, merely on procedural of lapse benefit of notifications cannot be denied to the appellant - Appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 3
  Recovery of sanctioned refund - it was alleged that the appellant has availed the excess refund of duty on account of discount given by the appellant to their buyers - Held that:- The discounts given by the appellant to their buyers are only on account of damaged goods and the discount given by the appellant was not pre condition of sale and the discount was not known before clearance of the goods. It is also fact on record that on account of discount given by the appellant, no duty has been recovered from their buyers - it cannot be said that the appellant has taken excess erroneous refund - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (1) TMI 2
  Principles of natural justice - failure to consider the objections resulted - opportunity of personal hearing also not provided to the petitioner - Held that:- The notices of proposal were sent to the assessee and in response to the notices, the assessee has filed a detailed reply opposing the proposal. The Assessing Officer in fact extracted the entire objections raised by the petitioner in the impugned orders. However, he has not chosen to give his finding as to how those objections are not sustainable - Further in this case, admittedly, the Assessing Officer has not chosen to give an opportunity of personal hearing. In Circular No.7 of 2014, wherein, it is stated that providing such opportunity of personal hearing is mandatory, not withstanding the fact whether such opportunity was sought for by the Assessee or not - Therefore, it is bounden duty of the Assessing Officer to give such opportunity of personal hearing, more particularly, when he is proposing to impose penalty on the assessee. As such opportunity is not given to the petitioner in this case, the impugned orders are liable to be set aside, on this ground as well. The matter is remitted back to the Assessing Officer to redo the assessment, by considering the objections raised by the petitioner and also by providing an opportunity of personal hearing to them - petition allowed by way of remand.

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• 2019 (1) TMI 1
  Levy of resale tax - printer cartridge - benefit of exemption notification II(2)/CT/568/F6/2002 dated 01.07.2002 - Section 3-H of the TNGST Act, 1959 - Held that:- Printer cartridges which are admittedly categorised as consumable in S.No.18(1) of the first schedule to the T.N.G.S.T. Act cannot be treated as peripherals for the purpose of the exemption notification. Division Bench of this Court in Kores India Ltd. Vs. State of Tamil Nadu [2018 (1) TMI 1252 - MADRAS HIGH COURT], which has been recently passed dealing with an identical issue under the TNGST Act, 1959 has held that ink jet cartridges and toner cartridges are parts and accessories of printer which is a peripheral to a computer system and would be covered under Entry Nos.22 & 24 of serial No.68, Part B of First Schedule to the Tamil Nadu Value Added Tax Act, 2006. Petition allowed.

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