Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 21, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST - States
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15 /GST-2 - dated
18-1-2019
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Haryana SGST
Seeks to amend Notification No. 115/ST-2 dated the 18th October, 2017
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13/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 03/ST-2 dated the 9th January, 2018
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12/GST-2 - dated
1-1-2019
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Haryana SGST
Notification 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 for the period July, 2017 to September, 2018 in specified cases under the HGST Act, 2017
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11/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 16/ST-2, dated the 25th January, 2018
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10/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 86/GST-2, dated the 18th September, 2018
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09/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 84/GST-2, dated the 18th September, 2018
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08/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 76/GST-2, dated the 10th August, 2018
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07/GST-2 - dated
1-1-2019
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Haryana SGST
Notification to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers under the HGST Act, 2017
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06/GST-2 - dated
1-1-2019
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Haryana SGST
Notification to extend the time limit for furnishing the return in FORM GSTR-3B for the newly migrated taxpayers under the HGST Act, 2017
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05/GST-2 - dated
1-1-2019
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Haryana SGST
Seeks to amend Notification No. 73/GST-2, dated the 6th August, 2018
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04 /GST-2 - dated
1-1-2019
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Haryana SGST
Corrigendum - Notification No. 82/GST-2 dated the 11th September, 2018
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109/GST-2 - dated
31-12-2018
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Haryana SGST
Notification to insert explanation in notification No. 46/ST-2, dated 30.06.2017 under section 11(3) of HGST Act, 2017
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108/GST-2 - dated
31-12-2018
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Haryana SGST
Seeks to amend Notification No. 48/ST-2, dated the 30th June, 2017
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107/GST-2 - dated
31-12-2018
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Haryana SGST
Seeks to amend Notification No. 47/ST-2, dated the 30th June, 2017
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106/GST-2 - dated
31-12-2018
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Haryana SGST
Seeks to amend Notification No. 46/ST-2, dated the 30th June, 2017
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105/GST-2 - dated
31-12-2018
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Haryana SGST
Notification to exempt the supply of gold by nominated agencies to exporters of gold jewellery
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104/GST-2 - dated
31-12-2018
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Haryana SGST
Seeks to amend Notification No. 36/ST-2, dated the 30th June, 2017
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103/GST-2 - dated
31-12-2018
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Haryana SGST
Seeks to amend Notification No. 35/ST-2, dated the 30th June, 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 271D - receipt in cash being undisclosed income - Loan or advance is a sine qua non or foundational fact for the applicability of the provisions of Section 269SS - No penalty.
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Transfer pricing addition - comparable selection criteria - it should not be assumed that, if a comparable is held to be excludible in one case, it shall always be excluded in decisions to follow subsequently.
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Co-operative societies engaged in providing credit facilities to its members had in course of business made investments with treasury, bank etc. and earned interest income, such income was eligible for deduction u/s 80P(2)(a)(i)
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AO rightly levied the penalty u/s 271 (1)(c) as the assessee has deliberately given inaccurate particulars of income.
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Depreciation on HFT or AFS - investments Held for Trading (HFT) and Available for Sale (AFS) - Amortization of premium over the period remaining to maturity. - AO shall first determine the issue whether these securities are identifiable under category HFT or AFS, and if yes, then depreciation is to be allowed
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Bogus LTCG - the assessee was not allowed cross-examination of the maker of the statement therefore, the statement of the persons cannot be used against the assessee for making addition u/s. 68.
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Disallowance in respect of waiver of interest on Government of India Loan - guarantee fee of LIC, u/s 41(1) - the stand of the department in earlier years is that the same is covered u/s 43B and therefore not allowable - Therefore, addition on account of Section 41(1) does not sustain.
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If assessee is not an “eligible assessee” in terms of section 144C(15)(b), then AO is not competent to pass a draft assessment order u/s 144C and the final assessment order consequently becomes time barred.
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Addition made on account of difference in quantitative details - The assessee has made a mistake while preparing the quantitative information for the relevant assessment year - Now, the assessee has filed the complete data - No additions.
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Reopening of assessment - the authority has not recorded proper satisfaction/approval, before issue of notice u/s. 148. AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the DIT (Inv.), New Delhi. - Notice quashed.
Customs
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100% EOU - Import of brass metal scrap containing other impurities without payment of duty as per Notification No.52/2003-Cus - the segregated foreign material cannot be treated as input “as such” for the purpose of levy of customs duty.
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Imposition of penalty - Mis-declaration of imported goods - Smuggling - penalty cannot be imposed both on the proprietor as well as the firm.
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Classification of imported goods - hook and eye fastening strip Nylon 60 - goods containing essential character of brassieres or not - the goods are to be classified under heading 8308 10 10
Service Tax
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Jurisdiction - service tax audit - an enquiry or an investigation or even a legal proceeding under the Act of 1994 is permissible notwithstanding the coming into effect the GST w.e.f. 1.7.2017
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Valuation - activity of re-treading of motor vehicle tyres - reduction of cost of goods on which VAT has paid - Petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities - Benefit of exemption allowed.
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Valuation - commercial coaching services - non-monetary consideration - amount of concession in the name of scholarship given by the appellant to its various students is not liable to be included in the assessable value
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Classification of services - Real estate agent services or not - it is not merely the real estate consultant but any person who facilitates getting any property /real estate sold, purchased, leased out or rented out shall be called as real estate agent and the services rendered by him under said capacity shall be taxable under Section 65 (105) (v) of the Act.
Central Excise
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Clandestine manufacture and removal - plastic molded chairs - burden of proof to establish that there was clandestine manufacture - seizure of the pen drive - correctness of the Mahazar - Revenue proved its case - Demand confirmed.
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Valuation - quantum of discount to be reduced - appellants are remunerating the re-sellers with 1% trade discount included in the 30% trade discount. The effective trade discount is only 29% - Demand confirmed for normal period of limitation.
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CENVAT Credit - inputs - cement - filling of the open ore pits with cement was a mandatory prerequisite for the appellant to extract ore - the cement used herein is something which has relation, though indirectly, with the extraction of ore thus it qualifies for input as defined under Rule 2(k), prevailing during the relevant period.
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MRP based Valuation - chewing tobacco - The retail packages in the present case were exempted from declaring the retail price being less than 10 grams in weight. There was no need for assesse to declare the price on the multi piece package which actually was a wholesale package.
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Extended period of limitation - It is on record that the demand has been raised as per the audit objection and the entire activity of appellant was known to the department - the entire demand is also time barred by limitation of period.
VAT
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Issuance of Form F - Stock transfer or not - If regularly the goods are not offloaded at the agent’s premises or directly sent to the buyer that could be another pointer to inter-State sale because such repeated transactions cannot be described as a co-incidence. But one circumstance by itself may not be sufficient
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The burden of proving that the movement of goods was occasioned not by reason of sale is on the dealer and to discharge this burden he must furnish to the assessing authority a declaration duly filled by the principal officer of the other place of business of the dealer along with the evidence of despatch of such goods.
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Tribunal while remanding the matter to the Assessing Officer should have left the Assessing Officer free to come to his conclusion after taking into consideration all the relevant circumstances independently and in accordance with law
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Denial of Issuance of statutory Form ‘C’ - inter-state purchases of goods - The respondent-State has not properly appreciated the difference between sale and agreement to sale and therefore, they are denying the grant of Form-C to this petitioner which is not permissible in the eye of law.
Case Laws:
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GST
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2019 (1) TMI 947
Detention of vehicle with goods - Section 129(1)(b) of the Uttar Pradesh Goods and Services Tax Act - contention of the petitioner is that the petitioner has already deposited the required tax of ₹ 64,400/- with penalty of a like amount which is evident from the payment receipt filed at page 36 of the writ petition and therefore he is not required to pay further penalty of ₹ 2,30,000/- as owner of the vehicle - Held that:- The matter requires consideration - List thereafter.
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2019 (1) TMI 946
Validity of order - Section 107(4) of the U.P. GST Act - submission of the petitioner is that there is a remedy of appeal under Section 112 before the Appellate Tribunal but because the Tribunal itself has not been constituted, he has no remedy except to approach this Court under Article 226 - Held that:- This fact has not been denied by the learned Standing Counsel - petition is entertained - List on 13.02.2019.
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Income Tax
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2019 (1) TMI 957
Delay in filing appeal - condonation of delay - bonafide on the part of the appellant in not filing the application for condonation of delay alongwith appeal - Approval u/s 10(23C)(vi)rejected - Held that:- Though there was some negligence on the part of Management of the Society in not pursuing the filing of appeal after entrustment of the documents to its counsel through mail but the negligence was not such of a degree that the Tribunal ought to have dismissed the appeal being barred by limitation. The application was duly supported by an affidavit. The necessity to disclose the name of the counsel alone would have embarrassed the Advocate concerned and amounted to casting aspersion on a Member of Bar. The fact that the application for condonation of delay was moved after receiving show cause notice from the Registry of the Tribunal gives credence to the appellant’s plea that it was under a bonafide impression that the appeal had been filed and it was only when the show cause notice was received that the appellant came to know that the counsel to whom documents were mailed had taken no steps to file the appeal. The aforesaid fact was suggestive of the bonafide on the part of the appellant in not filing the application for condonation of delay alongwith appeal. The only negligence on the part of the appellant society was that it failed to pursue the matter with the counsel to whom the documents were mailed. In the case of such type of negligence, equities can be well balanced by imposing costs on the party negligent. We are thus of the view that the Tribunal’s endeavour ought to have been to decide the appeal on merits instead of rejecting the same on technical ground of being barred by limitation.
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2019 (1) TMI 956
Reopening of assessment - deduction u/s 80IB(10) denied - AO seeks to reopen the assessment on the basis of the report furnished by the District Valuation Officer estimating the cost of construction - non rejection of books of accounts - invoking of section 142A - Held that:- Section 142A of the Act as it stood at the relevant time provided that where an estimate of the value of any investment referred to in section 69 or section 69B of the Act is required to be made for the purpose of making assessment or reassessment under the Act, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. For the purpose of invoking section 142A of the Act, the Assessing Officer has to first come to the conclusion that the assessee has made investments which are not recorded in the books of account, in which case, he would reject the books of account under sub-section (3) of section 145 of the Act and make an assessment in the manner provided in section 144. Assessing Officer sought to provisionally assess the petitioner which is not contemplated under the Income Tax Act, 1961. The Assessing Officer, while framing the assessment, may either accept the cost as given by the assessee or reject the same and make a best judgment assessment, but, there is no provision under the Act which permits the Assessing Officer to make a provisional assessment subject to the report of the District Valuation Officer. Once the Assessing Officer accepts the books of account and frames assessment, reopening the assessment solely on the basis of the report of the District Valuation Officer without any other material coming to his notice, would amount to mere change of opinion. In the facts of the present case, it is an admitted position that before making the reference to the District Valuation Officer, the Assessing Officer did not reject the books of account and on the contrary, framed the assessment on the basis of the cost of construction as reflected in the books of account. Under the circumstances, in the first place, no reference under section 142A of the Act as it stood at the relevant time could have been made without rejecting the books of account. Moreover, merely on the basis of the DVO's report, without any other material indicating escapement of income for the year under consideration, the Assessing Officer was not justified in reopening the assessment for the year under consideration. The Supreme Court, in the case of Dhariya Construction Co. [2010 (2) TMI 612 - SUPREME COURT OF INDIA] has held that, opinion given by the DVO is not per se information for the purpose of the reopening an assessment under section 147 of the Act - Decided in favour of assessee.
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2019 (1) TMI 955
Validity of reopening of assessment - income chargeable to tax has escaped assessment - petitioner had sold the immovable property during financial year 2010-11 but had not shown the capital gain arising out of such transaction in the return of income - assessment reopened beyond a period of four years from the end of relevant assessment year - Held that:- A perusal of the return of income filed by the petitioner shows that he has duly shown the long term capital gain arising out of the sale of property in question and has also given a detailed computation of income in the statement of Long Term Capital Gain. AO appears to have proceeded on a factually incorrect premise to the effect that the petitioner had not offered the long term capital gain for taxation. It is evident that the consideration received on account of sale of the immovable property as reflected in the reasons recorded is also incorrect inasmuch as the correct figure is ₹ 6,48,000/- and not ₹ 6,07,000/-. Besides, by the letter of verification dated 21.03.2018, the Assessing Officer had called upon the petitioner to furnish the details of sale of the property in question, in response to which, the petitioner had given a reply dated 26.03.2018 pointing out that transaction of sale building in Rang Mahaal which has been mentioned in the letter dated 21.03.2018 and the capital gain emerging therefrom, has been included in the income. The petitioner had also enclosed copies of the computation of income as well as the sale deed of the property in question. Despite the aforesaid position, in the reasons recorded, the Assessing Officer has stated that the assessee has not furnished any details in this regard despite letter having been issued to him. AOr has not applied his mind to the facts of the case and that the formation of belief on the part of the Assessing Officer that income chargeable to tax has escaped assessment is also based on an incorrect premise that the petitioner had not offered the capital gain arising from the sale of immoveable property in the return of income In this case, the assessment is sought to be reopened beyond a period of four years from the end of relevant assessment year. Therefore, unless there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment for the year under consideration, the assumption of jurisdiction under section 147 of the Act on the part of the Assessing Officer is without any authority of law. - Decided in favour of assessee.
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2019 (1) TMI 954
Reopening of assessment - failure on the part of the petitioner to disclose fully and truly all material facts - international transaction disclosure - assessment beyond a period of four years from the end of the relevant assessment year - Held that:- In the annexure to Form No.3CEB, the petitioner had shown particulars in respect of lending or borrowing money as well as the fact regarding the assessee having entered into international transactions, the details whereof are shown in Appendix-4. Thus, during the course of assessment proceedings, the petitioner had duly disclosed the international transactions which find reference in the reasons recorded. There is no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration. On a reading of the reasons recorded for reopening the assessment in their entirety, there is nothing therein to indicate that there is any failure on the part of the petitioner to disclose fully and truly all the relevant facts. On a plain reading of the reasons recorded, it is evident that the same refers to sections 92C and 92CA of the Act and the failure on part of the AO to observe the procedures prescribed thereunder. Under the circumstances, this being a reopening of the assessment beyond a period of four years from the end of the relevant assessment year, whereby the proviso to section 147 is clearly attracted, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts relevant for its assessment, the assumption of jurisdiction on the part of the Assessing Officer is without authority of law. Notice cannot be sustained - Decided in favour of assessee.
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2019 (1) TMI 953
Penalty u/s 271D - receipt in cash being undisclosed income - Violation of provisions of Section 269SS - Held that:- A perusal of Section 269SS of the Act of 1961 reveals that it prohibits receipt of loan or deposit made by any person, otherwise than by way of an account payee cheque or account payee draft. Loan or advance is a sine qua non or foundational fact for the applicability of the provisions of Section 269SS of the Act of 1961. In the extant facts, the assessee has stated that the amount represented assessee’s undisclosed income and the same was debited in cash book as peak cash deposit. It was upon the Assessing Officer to have recorded the finding that the assessee had received a loan or deposit or advance from a third party. In absence of such fact, which is a precursor for establishing of breach of Section 269SS of the Act of 1961, the penalty cannot be levied. Commissioner (Appeals-2), Udaipur was perfectly justified in holding that there is no violation of the provisions of Section 269SS of the Act of 1961 and thus, levy of penalty under Section 271D of the Act of 1961 was void. - Decided in favour of assessee.
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2019 (1) TMI 952
Transfer pricing addition - comparable selection criteria - functional similarity - Held that:- As assessee is characterised as performing engineering design services as a sub contractor to Fluor Affiliate, exposed to limited risk associated with carrying out such business,0 thus companies functionally dissimilar with that of assessee need to be deselected from final list. If difference arising on comparability analysis does not affect price or profitability of comparable, or if it can be reasonably adjusted, same should be taken as good comparable for Comparability analysis. Therefore, it should not be assumed that, if a comparable is held to be excludible in one case, it shall always be excluded in decisions to follow subsequently. Thus, while deciding comparability, decisions cited definitely would be perused from this angle by us.
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2019 (1) TMI 951
Penalty u/s 271(1)(c) - non deduction of tds u/s. 194H on payment gateway charges - disallowance u/s. 40(a)(ia) - Held that:- This issue has been decided by ITAT in assessee’s own case by the Tribunal for the year under consideration held that assessee is not liable to make TDS on payments gateway charges. Therefore, provisions of section 194H of the Income Tax Act would not apply to the facts and circumstances of the case. Accordingly, we are of the opinion that once the very basis of imposing penalty on this addition stood collapsed, there remaining no justification to sustain penalty on this count. For this view, we stand fortified by the decision of K.C. Builder v. Asstt. CIT [2004 (1) TMI 7 - SUPREME COURT] wherein it has been laid down that where the additions made in the assessment order on the basis of which penalty for concealment was levied has been deleted, there remains no basis at all for levying concealment penalty and therefore, in such a case no such penalty can survive. - decided in favour of assessee Excess depreciation claimed on website development cost @ 60% - Held that:- We find substantial weight in the contention of the assessee. It is notable that complete details/facts relating to the assets on which depreciation was claimed were furnished before the Assessing Officer and as such it can hardly be said that the assessee has furnished inaccurate particulars of income merely because the claim of assessee was not, in the opinion of Assessing Officer, sustainable in law. For this view, we stand fortified by the decision of Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT). - Appeal of assessee allowed.
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2019 (1) TMI 950
Levy of penalty u/s 271(1)(c) - defective notice - non striking of the irrelevant clauses in notice - non deleting of inappropriate words - Held that:- As decided in ASHOK KUMAR CHAUHAN PROP. M/S. GURUCHARAN JEWELLERS VERSUS ITO, WARD-26 (2) , NEW DELHI [2018 (12) TMI 1386 - ITAT DELHI] the standard proforma of notice under section 274 of the Act without striking of the irrelevant clauses would lead to an inference of non-application of mind by the Assessing Officer. The Hon'ble Supreme Court in the case of Dilip N. Shroff vs. JCIT [2007 (5) TMI 198 - SUPREME COURT] has also noticed that where the Assessing Officer issues notice under section 274 of the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of his income or furnished inaccurate particulars of income. - Decided in favour of assessee.
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2019 (1) TMI 949
Rectification of mistake u/s 154 - Tribunal has held that all the judgements cited by AR of assessee are distinguishable - nature of capital gain only whether the same is short term capital gain or long term capital gains - Held that:- There is an apparent mistake in the Tribunal order because it has been simply stated that various judgements referred to by the assessee are all distinguishable on facts without any specific reasoning and basis as to how these judgements are distinguishable on facts and in course of hearing of the M.P., it was the submission that at least in the judgment rendered in the case of Vinod Kumar Jain Vs. CIT &Ors. [2010 (9) TMI 850 - PUNJAB AND HARYANA HIGH COURT] the facts were at least apparently similar and hence, in our considered opinion, there is apparent mistake in the Tribunal order while deciding this issue in respect of holding period of the asset in question on sale of which the resulting capital gain was declared by the assessee as long term capital gain but was assessed by the AO as short term capital gain and in the process, claim of deduction u/s 54 was also disallowed. Hence, we recall this Tribunal order for limited purpose of deciding this issue afresh in respect of holding period of asset in question i.e. the flat at Hiranandani Meadows which was sold by the assessee through registered sale agreement dated 29.09.2009 and which was purchased by the assessee through registered purchase deed dated 06.03.2009 although as per the assessee, the said flat was allotted on 22.02.2006 and full payment was also made and therefore, the allotment date has to be taken as date of acquisition. - Decided in favour of assessee.
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2019 (1) TMI 948
Deduction u/s 80P(2)(a)(i) - interest income received by the assessee on investments made with Sub-Treasuries, Banks etc. - “income from other sources” or “income from business” - Held that:- We noticed that an identical issue was considered by the Cochin Bench of the Tribunal in the case of The Azhikode Service Co-operative Bank Ltd. & Others [2017 (7) TMI 1138 - ITAT COCHIN]decided the issue in favour of the assessee by holding that interest income received on investments with sub-treasuries and cooperative banks was entitled to the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act. The latest judgment in the case of Vaveru Co-operative Rural Bank Ltd. v CIT [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] had also decided on identical issue in favour of the assessees. The Hon’ble High Court had held that co-operative societies engaged in providing credit facilities to its members had in course of business made investments with treasury, bank etc. and earned interest income, such income was eligible for deduction u/s 80P(2)(a)(i) - decided against revenue
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2019 (1) TMI 945
Penalty u/s 271(l)(c) - disallowance of depreciation of leased premises - Held that:- Mistake in present case was not bonafide. From the records also, we can see that the assessee company only offered 50% claim of depreciation as its income and conveniently/deliberately concealed the actual fact that 2/3 part of the premises was on rent. In fact, the assessee repeated the said claims of depreciation as well as deduction u/s. 24 in A.Y. 2006-07 and 2008-09. AO rightly levied the penalty u/s 271 (1)(c). There is no need to interfere with the order of the CIT(A) as the assessee has deliberately given inaccurate particulars of income. Therefore, the appeal of the assessee is dismissed.
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2019 (1) TMI 944
Unexplained cash credit in the guise of sale of shares - Bogus LTCG - assessee not allowed cross-examination of the maker of the statement that the assessee received accommodation entry - Held that:- Sale consideration of shares of M/s. Shri Ganga Paper Mills Pvt. Ltd. at face value on which the assessee had not earned any capital gain. The shares already existed in the balance sheet of the assessee in the Assessment Years 2006- 07 and 2009-10. Further, the assessee was not allowed cross-examination of the maker of the statement that the assessee received accommodation entry of ₹ 69 lac in the guise of sale consideration of shares, and therefore, the statement of the persons cannot be used against the assessee for making addition u/s.68. No material has been brought on record by the Department to show that the above findings of the ld. CIT(A) are not correct. Even otherwise, no specific error in the order of the ld. CIT(A) could be pointed out by the learned Department Representative. Hence, we find no good reason to interfere with the order of the CIT(A) which is hereby confirmed and the grounds of appeal of the Revenue is dismissed.
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2019 (1) TMI 943
Depreciation claimed categorized under HFT or AFS - investments Held for Trading (HFT) and Available for Sale (AFS) - Amortization of premium over the period remaining to maturity - block of assets is defined u/s. 2(11) - Held that:- In the year in which securities was acquired, it was shown under the head investment without specifying category. It is quite difficult for us to conclusively to hold that these securities were held in HFT or AFS. Orders of both Revenue authorities are silent on this aspect. We have extracted finding of the AO as well as CIT(A). We have noticed the accounting treatment given by the assessee. Faced with this difficult, we deem it appropriate to set aside this issue to the file of AO for re-adjudication. The ld.AO shall first determine the issue whether these securities are identifiable under category HFT or AFS, and if yes, then according to case of Rajkot District Cooperative Bank [2014 (3) TMI 110 - GUJARAT HIGH COURT] depreciation is to be allowed. Otherwise, the AO shall decide the issue in accordance with law.
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2019 (1) TMI 942
Disallowance u/s 14A r.w.r 8D - Non recording of satisfaction - MAT computation - Held that:- We conclude that Ld. AO, without having recorded requisite satisfaction as to how the computations made by the assessee were not correct, could not be clinched with the blanket jurisdiction to apply Rule 8D. Therefore, the additional disallowance made by AO could not be sustained on this account. The said observation is in tune with the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] whereas it has been held that for the purpose of computing disallowance, only those investments which yielded exempt income during impugned AY were to be considered. Disallowance deserves to be deleted on this account also. Another factor that goes in assessee’s favor is the uncontroverted fact that own interest free funds in the shape of share capital and reserves far exceeded the investments made by the assessee and therefore, a presumption was drawn in assessee’s favor that the investments were funded out of own funds rather than out of borrowed funds and therefore, no interest disallowance was called for under the circumstances. Viewed from any angle, we find no infirmity in the impugned decision of Ld. first appellate authority in directing AO to deleted additional disallowance of ₹ 388.66 Lacs while arriving at income under normal provisions as well as u/s 115JB. Penalty u/s 271(1)(c) - disallowance u/s 40(a)(ia) - Held that:- Upon perusal, we find that the impugned penalty was levied by AO vide order dated 28/03/2013 on aggregate quantum additions of ₹ 13.21 Crores which comprised-off of wrong claim of business loss of ₹ 11.40 Crores and disallowance u/s 40(a)(ia) for ₹ 1.81 Crores. Upon appeal by the assessee before this Tribunal, both these issues have been remanded back to the file of CIT(A) with certain directions. Since, quantum additions against which the penalty has been levied has been set aside to CIT(A), it would be logical to set aside the consequential penalty levied against the same to the same authority. Therefore, the matter of penalty stand restored back to the file of CIT(A) for re-adjudication in the light of decision taken against the quantum additions as per the direction of the Tribunal. The appeal stands allowed for statistical purposes.
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2019 (1) TMI 941
Reopening of assessment - reasons recorded and satisfaction accorded is not within the meaning of section 151 - addition u/s 68 - reasons recorded and satisfaction accorded is not within the meaning of section 151 - Held that:- The satisfaction recorded and approval granted by the Addl. CIT, Range-6/Competent Authority is a mechanical and action has been taken mechanically because on perusing the reasons recorded, which demonstrates that Addl. CIT Range-6 has written “Approved” which establishes that the authority has not recorded proper satisfaction/approval, before issue of notice u/s. 148. AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the DIT (Inv.), New Delhi. We are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Issue of notice u/s. 148 of the I.T. Act, 1961 is not in accordance with section 151 of the I.T. Act, 1961, hence, the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and therefore, the same is hereby quashed - decided in favour of assessee.
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2019 (1) TMI 940
Addition made on account of difference in quantitative details - Revision u/s 263 - discrepancy in stock of Dettol soap fresh - AO explained the conversion factor as erroneously applied by assessee - difference in stock i.e., unaccounted purchased worked out to ₹ 1737.45 MT which remained unexplained - Held that:- It is clear that the assessee has applied the conversion factor of Dettol soap as is marketed in bars weighing 75 gms and 150 gms whereas Dettol liquid soap is marketed in 250 ml. bottles/dispensers. Similarly, Dettol anticipated liquid is marketed in 100 ml. and 500 ml bottles and Dettol Shaving creams in 70 gms tubes. The dispute is restricted to the conversion factor applicable in respect of Dettol soap fresh of 75 gms packing and assessee has file quantitative information in this regard and it proves that the assessee is following the system of computing the weight of its item by multiplying the total no. of boxes with an appropriate multiplier. Similarly, once the multiplier per box is arrived at, the same is applied to the total no. of boxes and the total volume soap cakes, sold in grams is arrived at. The assessee has made a mistake while preparing the quantitative information for the relevant assessment year, as the concerned official of the assessee instead of applying the weight of Dettol soap fresh cake as 75 gms, applied as 250 gms (this is actually Dettol liquid soap sold in 250 ml). Now, the assessee has filed the complete data as discussed above and Revenue / learned CIT DR, could not controvert the above discussed facts before us. Accordingly, we are of the view that the difference in stock to the extent of 1737.45 mt in the stock of Dettol is entirely due to above errors, which has been properly explained with the re-conciliations supported by the book entries. Hence, we find no difference in the stock as above explained. Hence, we delete the addition and allow this appeal of the assessee. - Decided in favour of assessee.
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2019 (1) TMI 939
Bogus LTCG - addition u/s 68 - accommodation entry receipt - cross-examination to the assessee of brokers relying on whom addition is being made - Held that:- A.O. relied upon certain statements of the share brokers recorded by Investigation Wing, Kolkata to prove that they have provided accommodation entries for long term capital gains. The assessee in her statement requested that assessee may be allowed for cross-examinations of these statements. However, no cross-examination have been allowed to the assessee to cross-examine any of such share brokers. Therefore, such statements could not be admissible in evidence against the assessee. As pointed-out from the assessment order that A.O. recorded balance-sheet and P & L A/c of M/s. Jackson Investment Ltd., and their figures of income and net worth for several years to show that the said Company was declaring the profit as well as having net worth. Considering the above discussion, the decisions relied upon by the Ld. D.R. would not support the case of the Revenue. The issue is, therefore, covered by the Order of Shri Amar Nath Goenka, New Delhi & Others vs. The ACIT, Circle-20(1), New Delhi (2018 (12) TMI 754 - ITAT DELHI). - Decided in favour of assessee
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2019 (1) TMI 938
“Eligible assessee” in accordance with section 144C(15)(b) - draft assessment order proposed to tax the income of the assessee - Income accrued in India - DRP jurisdiction over the case - neither the TPO proposed any variation in the returned income nor the assessee is a foreign company - existence of PE in India - Held that:- As decided in assessee own sister concerns case now there are numerous judgments not only passed by the various High Courts but also by this Tribunal, wherein it has been categorically held that, if assessee is not an “eligible assessee” in terms of section 144C(15)(b), then AO is not competent to pass a draft assessment order u/s 144C and the final assessment order consequently becomes time barred. Accordingly, following the aforesaid binding judicial precedents, we hold that the draft assessment order is invalid and consequently the impugned final assessment order is also unsustainable in law and is set aside. - Decided against revenue
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2019 (1) TMI 937
Reopening of assessment - failure on the part of the assessee to disclose fully and truly all material facts - Held that:- The conditions postulated in main provision as well as the first proviso are therefore required to be followed scrupulously to initiate reassessment proceedings. As per the first proviso, no action can be taken u/s 147 unless there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The reasons disclosed to the assessee in fact indicates otherwise. From the reasons recorded it appears that the relevant facts were made available to the A.O at the time of the original assessment. Coupled with this, we do not see any allegation from the A.O against the assessee in the reasons recorded under section 148(2) of the Act towards any such failure on the part of the assessee to disclose relevant facts fully and truly. Therefore, apparently the conditions prescribed in the first proviso are not complied with and therefore the notice under section 148 of the Act seeking to re-open the completed assessment is clearly timed barred. The reassessment proceedings under section 147 of the Act is therefore clearly bad in law and requires to be quashed. Once it is found that the action under section 147 of the Act is not sustainable in law, the consequent order passed under section 143(3) r.w.s 147 is clearly void at the threshold. Consequently, the reassessment order so passed is set aside and cancelled.- Decided in favour of assessee. ALV of property (deemed let out property) under section 23(1)(a) - enhancing the deemed income by way of substituted ALV - Held that:- No justification for the action of the lower authorities in disregarding the municipal rateable value for determination of estimated ALV and substitution thereof by some expected rent based on some unauthentic information. Consequently, the action of the deserves to be set aside and the additions made on this score requires to be cancelled. - Decided in favour of the assessee. Long term capital loss on transfer of mutual fund units - Held that:- As pointed out on behalf of the assessee, certain evidences are alleged to have not been produced to support the revised claim before the lower authorities. In the circumstances we consider it expedient to restore the issue back to the file of the A.O to enable the assessee to avail afresh opportunity for corroboration of the revised loss so claimed and decide the issue in accordance with law denovo. Needless to say, the A.O shall adjudicate the issue after giving reasonable opportunity to the assessee.Consequently, the ground raised in this regard is allowed for statistical purposes. Quantification of long term capital loss on transfer of mutual fund units - Held that:- As pointed out on behalf of the assessee, certain evidences are alleged to have not been produced to support the revised claim before the lower authorities. In the circumstances we consider it expedient to restore the issue back to the file of the A.O to enable the assessee to avail afresh opportunity for corroboration of the revised loss so claimed and decide the issue in accordance with law denovo. Needless to say, the A.O shall adjudicate the issue after giving reasonable opportunity to the assessee. Consequently, the ground raised in this regard is allowed for statistical purposes.
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2019 (1) TMI 936
Disallowing assessee’s Employees’ Contribution to Provident Fund paid beyond due date prescribed in the respective statute - contribution deposited before the due date of filing of return u/s 139(1) - Held that:- DR fails to rebut the clinching findings in the CIT(A)’s order that assessee had paid the contribution in issue well before the due date of filing return u/s 139(1) of the Act. Hon'ble jurisdictional high court’s decision in ACIT vs. M/s Vijjay Shree Ltd [2011 (9) TMI 30 - CALCUTTA HIGH COURT] held that the impugned disallowance in case of employee’s contribution deposited before the due date of filing of return u/s 139(1) of the Act is not sustainable. The CIT(A) has already followed the same in his finding under challenge. We thus decline Revenue’s instant first substantive ground. Disallowance of foreign exchange loss treating the same as business loss allowable u/s 37 - Held that:- The assessee had converted it rupee term loan into FCNR loan in order to save the interest cost being linked to LIBOR. The impugned loan was part of circulating capital. The loss in issue therefore arises from foreign currency hedging only forming part of revenue head in profit and loss account which is not disputed at Revenue’s behest. Decision in Sutlej Cotton Mills Ltd vs. CIT (1978 (9) TMI 1 - SUPREME COURT) made it clear long back that such gain / loss falls under trading head of foreign currency in question held in revenue account or a trading asset or part of circulating capital. Their lordship latter decision in CIT vs. Woodward Governor India Pvt Ltd (2009 (4) TMI 4 - SUPREME COURT) also discarded Revenue’s inconsistent stands in adopting a different approach qua the very issue in preceding and succeeding assessment years. We take into account all these facts as well as settled legal position to conclude that the CIT(A) has rightly treated assessee’s foreign currency accordingly loss to be revenue expenditure is allowable sec. 37 of the Act. Seeking to revive sec. 14A r.w.s 8D disallowance pertaining to assessee’s exempt income from dividends - Held that:- AO had invoked Rule 8D(2)(ii) & (iii) for computing proportionate interest and administrative expenditure disallowance @ 0.5% of average value of investments involving sums of ₹24,16,66/- and ₹7,65,358/- as against taxpayer’s suo motu disallowance of ₹1,08,285/- resulting in net disallowance of ₹21,79,166/-. The CIT(A) has directed the Assessing Officer to recompute the impugned disallowance after including exempt income yielding investments only as per order in REI Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT]. We therefore find no reason to disturb the CIT(A)’s direction to the Assessing Officer for re-computation of sec. 14A r.w.s 8D disallowance in issue. - Revenue’s appeal is dismissed accordingly.
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2019 (1) TMI 935
Disallowance in respect of waiver of interest on Government of India Loan - guarantee fee of LIC, u/s 41(1) - consequent tax liability approved by the Cabinet Committee on Economic Affairs, Government of India - the stand of the department in earlier years is that the same is covered u/s 43B and therefore not allowable - Held that:- In the present case the assessee company has not claimed waiver of interest on GOI Loan, Guarantee Fee and commitment fee as its expenditure. It is pertinent to note that the waiver of the Interest on loan by the Government of India as well as waiver of LIC guarantee fee along with waiver of Government of India loan has been rightly indicated in the financial statements produced before the AO and the same were reflected in the books of accounts. Therefore, addition on account of Section 41(1) does not sustain. AO as well as the CIT(A) are not correct in making and confirming the additions. Hence, Ground No. 2 is allowed. Adjustment of carry forward of losses and depreciation - Held that:- CIT(A) has not given any direction for adjustment of carry forward of losses and depreciation as per appellate order in earlier years, for which, the issue needs to be adjudicated by the CIT(A). Therefore, we are remanding back this issue to the file of the CIT(A). Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Issue allowed for statistical purpose.
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2019 (1) TMI 934
Assessment framed in the hands of Ramesh Upadhyay, HUF - larger HUF was partitioned or disrupted as per the memorandum of oral partition which was later on registered by partition deed dated 26.04.2002 - Held that:- Assessment cannot be framed in the hands of Ramesh Upadhyay, HUF, as it has already been disrupted among smaller HUF. Unexplained investments in FDRs - Held that:- Whenever the investment in FDRs are to be examined, the agricultural income earned by the assessee in different assessment years should also be examined and credit of the same should be given. In the foregoing paras, we have categorically held that the additions made on account of unexplained investment in the FDRs cannot be made in the hands of Ramesh Upadhyay, HUF as it was disrupted through memorandum and in the hands of E. Krishna Murthy, individual as FDRs belongs to all the family members. The addition can only be made in the hands of the smaller HUF i.e., E. Krishna Murthy, E. Vidyaranya, E. Thrivikrama, E Manohara and E. Sudharshan. CIT(A) confirmed the additions in the hands of the smaller HUF but the proper credit of the agricultural income was not given. We therefore are of the view that the entire investment in FDRs should be apportioned amongst all the smaller HUF. Similarly, the total agricultural income earned from the agricultural holdings and the business income should also be apportioned amongst all the smaller HUFs for its adjustment against the investment in FDRs in different assessment years. We therefore set aside the order of CIT(A) and restore the matter to AO with the direction to recompute the investment in FDRs in all the smaller HUFs E. Krishna Murthy, E. Vidyaranya, E. Thrivikrama, E Manohara and E. Sudharshan by making equal distribution and for computing the unexplained investment in each and every small HUFs, the adjustment of agricultural income estimated by the CIT(A) and business income earned by the individual smaller HUF should be given while computing the unexplained investment in FDRs in different assessment years. - Decided against revenue.
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2019 (1) TMI 933
Addition u/s 68 - creditworthiness of the respective parties from whom the assessee had received loans - Held that:- Though the assessee had placed on record the copies of the bank accounts of the respective lenders, however neither any effort had been put in either by the assessee to establish beyond doubt the creditworthiness of the said lenders, nor any such exercise had been embarked upon by the A.O. As the identity of the parties has been accepted by the CIT(A) and the same has not been assailed by the revenue before us, thus the same attains finality and is not dispute. The matter as regards the creditworthiness of the respective parties from whom the assessee had received loans aggregating to ₹ 2,14,92,800/- had not been proved, thus on the said count the issue requires to be revisited by the A.O The matter is therefore set aside to the file of the A.O, who is herein directed to readjudicate the genuineness and veracity of the loan transactions under consideration after making necessary verification as regards the creditworthiness of the lender parties. Needless to say, the A.O shall afford a reasonable opportunity of being heard to the assessee during the course of the set aside proceedings. Further, the assessee shall remain at a liberty to place on record fresh documentary evidence in order of substantiate the creditworthiness of the parties under consideration. The Ground of Appeal No. 2 & 3 are allowed for statistical purpose. Disallowance of Legal and Professional fees - Held that:- We are of the considered view that the aforementioned disallowance was carried out by the A.O not only for the reason that certain vouchers were not verifiable, but also for the reason that the assessee had failed to maintain any log book/record which could rule out incurring of any part of the aforementioned expenses for non business purposes. In the absence of irrefutable documentary evidence which could substantiate the claim of expense raised by an assessee, the assessing authority is left with no other option but in all fairness to disallow a part of such expenditure so claimed by the assessee. In the case before us, as the assessee had failed to maintain the log book/records, and had merely tried to support its claim of cash expenses on the basis of self made vouchers, thus we are of the considered view that the A.O not inspired by the said unsubstantiated claim of expenses by the assessee, had thus in all fairness disallowed 10% of such expenses leading to a consequential addition of ₹ 8,01,550/- in the hands of the assessee. We thus not finding any infirmity in the orders of the lower authorities, uphold the disallowed of 10% of the total expenses of ₹ 80,15,452/-. Disallowance of repairs and maintenance expenditure - Held that:- We though are in agreement with the observations of the lower authorities, that an expenditure which is in the nature of a “capital expenditure” cannot be allowed in the garb of claim of the same by the assessee as a revenue expenditure, but in the absence of any reference to any such “capital expenditure” of ₹ 1,00,000/- which had been claimed by the assessee as a “revenue expenditure”, we are unable to persuade ourselves to dislodge the aforesaid claim of expenditure so raised by the assessee. We thus, in the backdrop of our aforesaid observations delete the addition/disallowance of the repair and maintenance expenses and set aside the order of CIT(A) to the said extent. Disallowance u/s 41(1) - cessation or remission of liability - Held that:- A.O before inferring the cessation or remission of liability under Sec. 41(1) has however failed to verify as to whether any part of outstanding liability was discharged by the assessee in the succeeding years or not. On the basis of our aforesaid deliberations, we are of the considered view that the matters requires to be revisited by the A.O. A.O shall during the course of the set aside proceedings verify as to whether any part of the outstanding liability of ₹ 5,57,78,625/- as claimed by the assessee had been discharged in the succeeding years, or not. Further, the assessee is afforded an opportunity to place on record the confirmations from the respective parties and/or documentary evidence which could substantiate to the hilt that the said respective liabilities were outstanding as on 31.03.2010 and had neither ceased or stood remitted. In case the assessee fails to substantiate its claim in respect of the aforesaid liabilities, then the A.O shall remain at a liberty to assess it as the deemed income of the assessee under Sec. 41(1). Addition u/s 36(1)(va) - delay on the part of the assessee in depositing the amount of the employees contribution to ESIC and PF - Held that:- We find that though the assessee had made the payments towards employees contribution to provident fund and ESIC beyond the stipulated time period, however the said amounts were paid before the “due date” of filing of the return of income by the assessee under Sec. 139(1) of the Act. We are of the considered view, that now when the aforementioned amounts had been deposited by the assessee before the “due date” of filing of the return of income, thus no disallowance of the said amount was called for in the hands of the assessee. We find that the issue under consideration is squarely covered by the judgment of the Hon”ble High Court of Bombay in the case of CIT Vs. Ghatge Patil Transports Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT). The Hon”ble High Court in its aforesaid order had clearly observed that both employees and employers contribution would be covered under the amendment to Sec. 43B. Disallowance u/s 40(a)(ia) - Held that:- The word “Payable” occurring in Sec. 40(a)(ia) refers not only to those cases where the amount is yet to be paid, but would also cover the cases where the amount has actually been paid. In the backdrop of the aforesaid settled position of law, the contention raised by the assessee is dismissed Disallowance of depreciation on car - Held that:- The assessee was duly entitled towards the claim of depreciation on the aforesaid motor car, set aside the order of the CIT(A) and delete the disallowance of depreciation sustained by the CIT(A). Addition u/s 68 - Held that:- The matter as regards the “nature” and “source” of the cash credits aggregating to ₹ 2,46,78,611/- appearing in the books of accounts of the assessee requires to be revisited. The matter is set aside to the file of the A.O, who is herein directed to readjudicate the genuineness and veracity of the loan transactions under consideration after making necessary verifications as regards the “nature” and “source” of the aforementioned cash credits. Needless to say, the A.O shall afford a reasonable opportunity of being heard to the assessee during the course of the set aside proceedings. Further, the assessee shall remain at a liberty to place on record fresh documentary evidence in order to substantiate the genuineness and veracity of the loan transactions of the parties under consideration. Disallowance of the legal and professional fees expenses - Held that:- We find that a similar disallowance by the A.O of legal and professional fees of ₹ 96.66 lacs that was paid for defending a criminal complaint, was deleted by the CIT(A) in the assesses own case for A.Y. 2008-09, after the A.O had in his remand report admitted that the said expenditure was allowable in the hands of the assessee. Further, on appeal by the revenue the Tribunal had upheld the order of the CIT(A) and had observed that the revenue could not show as how the claim of the said expenditure was not allowable. We thus, in terms of our aforesaid observations and the view taken by the coordinate bench of the Tribunal while disposing off the appeal of the revenue in the assesses own case for A.Y. 2008-09 are of the considered view that the legal and professional fees expenses incurred by the assessee was duly allowable as an expense under Sec. 37 Recharacterization of the business loss as a speculation loss by the A.O. - Held that:- We find that the A.O in all fairness observing that the assessee had not maintained separate books of accounts for speculation and non-speculation income, thus in proportion of turnover had allocated expenses of ₹ 49,591/-, as having been incurred by the assessee in context of the speculation activity carried out by it. On the basis of the aforesaid deliberations, the A.O had worked out the total speculation loss in the hands of the assessee at ₹ 15,42,375/- [i.e. ₹ 14,92,784/- + ₹ 49,591/-]. We have deliberated at length on the issue under consideration and are persuaded to subscribe to the observations of the lower authorities as regards the recharacterization of the share trading loss of ₹ 14,92,784/-, and further allocation of expenses of ₹ 49,591/- towards the speculation activities of the assessee. We thus, finding no infirmity in the order of the CIT(A) who had approved the aforesaid view of the A.O, uphold his order to the said extent. The Additional Ground of Appeal raised by the assessee is dismissed.
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2019 (1) TMI 932
Disallowance of payments made to sub-contractors both on genuineness and u/s 40A(3) - assessee is engaged in the business of civil construction and excavation and evacuation of dry fly ash from the plant - Held that:- From perusal of the cash book of the three sub-contractors and the assessee and found that the assessee had not made cash payments exceeding ₹ 20,000/- on a single day . Hence there is no violation of provisions of section 40A(3) of the Act. Admittedly, the ledger accounts of sub-contractors were obtained by the ld AO directly from the sub-contractors u/s 133(6) of the Act, wherein these facts were found. These details were obtained admittedly by the ld AO behind the back of the assessee and nothing adverse was found thereon. Moreover, we find that the AR rightly drew our attention to the relevant page of the paper book containing work orders wherein the sub-contractors had mandated payments to be made to them in cash every day to meet their day to day expenses for daily labour and lorry hire for smooth execution of the work. Hence business expediency of making cash payments on a regular basis is also proved by the assessee in the instant case. CIT-A had rightly deleted the disallowance of expenditure on account of genuineness and also u/s 40A(3) of the Act, which in our considered opinion, does not call for any interference - decided against revenue
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2019 (1) TMI 931
Addition u/s 36.(i)(iii) - assessee has diverted its interest bearing funds to the sister / associate concerns without any business consideration or commercial expediency - CIT(A) has deleted the addition - Held that:- No opportunity was given to the appellant in the course of assessment proceedings before making the disallowance on this issue. Further, I find that contentions of the appellant with regard to the availability of interest-free funds are correct as is seen from the financial statements that share capital including share premium of ₹ 82.50 crore was raised in the preceding year and interest-free loans and advances of ₹ 60.61 crore has been given to the related party in the current year. The appellant has explained that share capital and free reserves & surplus amounting to ₹ 109.19 crore were available as on 31/03/2012 and therefore, the question of transfer of interest bearing funds does not arise. We find that the decision of the Ld. CIT(A) is based on the relevant facts pertaining to the financial position of the assessee after duly analyzing the availability of own funds and taking into consideration the orders of the Tribunal, judgments of the jurisdictional High Court. Interfering or altering in the well reasoned order of the Ld. CIT(A) would only disturb the settled position of law in force and hence the order of the Ld. CIT(A) is hereby confirmed. - decided against revenue
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2019 (1) TMI 930
Levy of penalty u/s.271(1)(c) - addition on an estimated basis by rejecting the book results - Held that:- As settled legal position on the issue of requirement of initiation of penalty as well as levy of penalty by the CIT(A) who makes the addition for the first time on new grounds, the penalty stands unsustainable on technical grounds. In any case, the addition of ₹ 5 lakhs constitutes adhoc addition based on the estimations. On this ground also, assessee gets relief. Penalty levied originally by the AO stands deleted as they no longer exists. See Arya Hybrids Seeds Ltd. Vs. DCIT [2017 (1) TMI 993 - ITAT PUNE]. CIT(A) deleted the same. Further, the penalty levied on the addition of ₹ 5 lakhs sustained by the CIT(A), will be unsustainable in law as the relevant penalty proceedings should have been initiated by the CIT(A) only as the addition of ₹ 5 lakhs is his creation. Considering all we are of the considered opinion that the penalty levied by the AO is required to be quashed. We accordingly order the AO to delete the same. - Grounds raised by the assessee are allowed.
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2019 (1) TMI 929
Revenue Expenditure OR Capital expenditure - assessee was following completed contract method - disallowance of expenses as claimed by the assessee in Profit & Loss Account - Held that:- After due consideration of the factual matrix, we find that the revenue is unable to controvert the fact that the assessee was following percentage of completion method which is evident from the aforesaid report of Ld. AO. Nothing on record suggest that there was any change in the accounting policies adopted by the assessee and further, the genuineness of the expenditure is not under dispute since AO has already allowed the capitalization of these expenses. On the above facts and circumstances, we find that the stand of CIT(A) on placing reliance on the decision of this Tribunal in the case of other group concerns, on similar factual matrix, was quite appropriate and logical. The revenue is unable to controvert these decisions by any binding judicial precedents. Therefore, finding no infirmity in the order of Ld. First appellate authority, we dismiss the revenue’s appeal.
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2019 (1) TMI 893
Disallowance of business loss - scrips considered as bogus - Held that:- We find the issue of gains arising out of shares of these type of companies had been the subject matter of adjudication by this tribunal in the case of Smt. Savita Bhura vs DCIT [2018 (9) TMI 1783 - ITAT KOLKATA] for Asst Year 2013-14 wherein reliance was placed on various decisions of tribunals and high courts. Some of them were even followed by the ld CITA while granting relief to the assessee. Hence we do not find any infirmity in the order of the ld CITA granting relief to the assessee. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the judicial precedent relied upon hereinabove, we hold that the ld AO had erred in disallowing the business loss incurred in the sum of ₹ 3,85,70,774/- in respect of two scrips as bogus which were rightly deleted by the ld CIT-A. Accordingly, the Grounds 1 & 2 raised by the revenue are dismissed. Disallowance made u/s 35(1)(ii) - whether assessee is not eligible for weighted deduction u/s 35(1)(ii) - Held that:- We find that the issue under dispute is already addressed by the order of this tribunal in the case of DCIT vs M/s Maco Corporation (India) Pvt Ltd [2018 (3) TMI 811 - ITAT KOLKATA]
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2019 (1) TMI 892
Bogus LTCG - unexplained cash credit u/s 68 - unexplained expenditure on account of commission - assessee had made investment in shares not having any sound financial position or business activity so as to justify the long term capital gains to this extent - Held that:- AO erred in recording a finding of fact that the assessee had made the purchase of M/s. NFGL not through Stock Exchange but it was an off market transaction. We find that the assessee had purchased the shares of M/s. NFGL through registered broker M/s. M. Prasad & Co. which was a registered stock broker of the Bombay Stock Exchange and on 13.06.2012 assessee purchased 25000 shares at ₹ 128.25 per share on which STT was paid and the total transaction of ₹ 32,21,213.10 was paid through account payee cheque to the registered broker and the shares were deposited in the demat account (D. P. Stock HLDG Corp of India Ltd.) Revenue fails to indicate any specific evidence against the assessee in terms qua the LTCG derived from transfer of shares in the mentioned two companies. We therefore delete the impugned bogus LTCG addition. Consequently the addition made towards unexplained expenditure on account of commission also stands automatically deleted.- Decided in favour of assessee.
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Customs
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2019 (1) TMI 925
100% EOU - Import of brass metal scrap containing other impurities without payment of duty as per Notification No.52/2003-Cus dated 31.03.2003 for manufacture of brass articles - contravention of N/N. 53/2003-Cus dated 31.03.2003 - it was alleged that segregation of imported brass scrap into foundry and non-foundry did not result into manufacture, as per CBEC Circular No.62 of 2001 dated 12.11.2001 - it was also alleged that the utilization/clearance of excess scrap, could be said to have been not used for the intended purpose - contravention of N/N. 52/2003-Cus. Held that:- What the respondent has imported is brass scrap for the purpose of manufacturing brass articles. For this purpose, the scrap has to be segregated to first remove the brass and foundry items which are then used for manufacturing purpose. Unless the plastic and other waste is removed, it would not be possible to use the brass for manufacture. Therefore, the segregation of the brass and foundry from the scrap is the first step in the manufacturing process and the plastic and other material generated on account of such segregation, which cannot be used for manufacturing brass articles do not retain the character of the item which was imported, viz., brass scrap. Therefore, the question of charging customs duty on such goods by considering them to be articles imported “as such” would not arise. CBEC Circular No.62/2001-Cus dated 12.11.2001 - Held that:- The Circular relates to valuation of plastic waste and scrap - The identity of the goods imported and the goods cleared into DTA is the same, namely plastic waste. Evidently, therefore, the plastic waste cleared into DTA is clearance of plastic waste “as such”. Whereas in the facts of the present case, what is imported is brass scrap and what is cleared into DTA is waste other than brass and foundry items, the identity whereof is different from the goods imported. The said circular would, therefore, have no applicability to the facts of this case. Circular No.1029/2016-CX dated 10.05.2016 - Held that:- The Circular clarifies regarding segregation of impurities, viz., iron, steel, rubber, plastic, dust etc. from honey grade plastic scrap - while the above circular clarifies whether segregated foreign materials from imported honey grade brass scrap can be treated as “inputs as such” as contemplated in rule 3(5) of the CENVAT Credit Rules, 2004, the principle involved is the same. In this case also, the segregated material has an altogether different character and use vis-ŕ-vis the brass scrap. The value per unit and classification of the segregated foreign materials is also different from that of the imported brass scrap. As a necessary corollary therefore, the segregated foreign material cannot be treated as input “as such” for the purpose of levy of customs duty. The Tribunal, therefore, did not commit any error in placing reliance upon Circular No.1029/2016-/CX dated 10th May, 2016. Whether clearance of such scrap upon payment of excise duty would fall within the ambit of paragraph 3 of Notification No.52/2003- Cus dated 31.03.2003? - Held that:- Waste and scrap arising in the course of production or manufacture of finished goods are also exempt from the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act - Reverting to the facts of the present case, as noticed hereinabove, the segregated waste has arisen in the course of production/manufacture of the finished goods viz. brass articles; the Commissioner of Customs has recorded that the segregated waste had in fact been cleared on payment of duty after being duly permitted by the Development Commissioner in accordance with the provisions of the EXIM Policy. The requirements of clause (3) of Notification: 52/2003-Cus dated 31st March, 2003 are therefore, wholly satisfied - there does not appear to be any legal infirmity in the view adopted by the Tribunal. Appeal dismissed - decided against appellant-Revenue.
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2019 (1) TMI 924
Prohibition on movement of livestock - alleged violation under the Cruelty to Animals Act for the consignment scheduled to be exported on 6.8.2018 - Held that:- This Court is of the view that the present petition is squarely covered by the decision rendered by the Division Bench of this Court on 30.11.2018 in Special Civil Application No.17433 of 2018 - The respondent authorities are directed to process shipping bill of the petitioner in accordance with law without any further delay.
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2019 (1) TMI 923
Validity of order in original - the competent concerned authority at Nhava Sheva, Raigad, Maharashtra has already rendered a decision on 30.6.2014 and hence the entire exercise undertaken by the respondent No.3 for issuing the order dated 29.03.2018 was unfortunate, unwarranted and deserves to be quashed and set aside - the concerned authority did record the new address of the petitioner - Held that:- This is a fit case in which if the court is not called upon to exercise its discretion then not only would cause prejudice to the petitioner but would unnecessarily encroached upon the time of the tribunal. The court would have rather considered for awarding appropriate cost also had there been some intimation to the authority deciding subsequent proceedings. In the instant case, as there was no intimation to the subsequent authority, we are not inclined to award any cost but we will surely would like to record that appropriate communication and inter-departmental exchanges would have avoided - Petition allowed.
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2019 (1) TMI 922
Cancellation of candidature of customs broker - surrender of H Card - violation of Fundamental Right or not - N/N. 40/2012-Customs dated 02.05.2012 - Held that:- It is clear that the person employed with the Customs Broker is required to be free of any adverse reports. The past antecedents for the suitability of issue of H Card is a mandatory requirement of work on employment with Customs Broker. Needless to say, G Card carries more responsibilities like signing the documents on behalf of the importer and Customs Broker and requires a stricter scrutiny. In the instant case, the petitioner had failed to qualify the requirements of the CBLR, 2013 to claim right of appearance for the examination for G Card - Petition dismissed.
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2019 (1) TMI 921
Imposition of penalty - Mis-declaration of imported goods - Smuggling - Whereas the goods were declared as toys, the actual goods were batteries, CFL, ladies inner ware, soap, etc. - appellant have already suffered arrest and served detention for some time under COFEPOSA - Held that:- From the case records, it is seen that M/s. Trichur Traders are the importers and have filed the Bills of Entry. It is on record that discrepancies in the weight and description of the goods in the Bills of Lading and goods actually arrived in the containers is established. He has arranged for the import of the consignment and paid the foreign supplier. It is very difficult to believe that goods for which an order has not been placed and for which payment has not been made would arrive just like that without the active knowledge of the importer. The importer has filed the Bill of Entry under Section 46 of the Customs Act, 1962. The importer has accepted his guilt in the statements given before DRI. As such, the importer cannot hide under the reason that they have simply signed the documents given by the CHA for the purpose of clearance of the cargo. The thrust of appellant argument is that they were not aware of the clandestine/illegal clearance of the goods from the port premises itself without payment of duty. Such an argument would not obviate the fact that they are the importers and as such, they are liable for the discrepancies in the import. Therefore, they have rendered themselves liable to pay penalty. However, penalty cannot be imposed both on the proprietor as well as the firm. The imposition of penalty on Shri C. K. Boban is valid. Penalties imposed on M/s. Trichur Traders are set aside. Penalty on Shri A. R. Ajeesh, working for CHA - Held that:- The incontrovertible evidence has been placed to show the role of Shri A. R. Ajeesh in the modus operandi which was also corroborated by the statements of others and photocopy of container cell permission letter recovered from the premises of CHA. Therefore, the retraction by Shri A. R. Ajeesh does not hold any water - penalties on Shri A. R. Ajeesh are tenable, however, quantum is reduced. Appeal allowed in part.
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2019 (1) TMI 920
Condonation of delay of 110 days in filing the appeal - delay occurred as the appellant/applicant to switch over to GST regime effective from 01.07.2013 and also for sickness of the officer in-charge of customs related matter - Held that:- It can be said that appellant's submissions are not based on factual aspect but the grounds submitted by the applicant for filing of appeal at a belated stage that introduction of GST regime had kept busy the corporate world for a considerable time - Further having regard to the fact that the authorised signatory was sick and medical certificate is filed to that effect, it is considered that cause of delay was "reasonable" for which delay is condonable - the delay of 206 days in filing appeal is condoned subject to payment of cost of ₹ 10,000/- to the Government Treasury within a month hence - COD application allowed.
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2019 (1) TMI 919
Classification of imported goods - hook and eye fastening strip Nylon 60 - goods containing essential character of brassieres or not - whether classified under CTH 8308 10 10 or under Tariff Heading 6212 90 90 - adoption of HSN - Held that:- The samples of the imported goods consists of a set of hook and eye incorporated into a textile backing. One strip has three parallel rows with the brackets and other strips have a row with two hooks. Some samples were having only one hook and three eyes on the two different strips. If the eye and hook which is made of base metal with some part containing that of textile, plastic etc., would be classifiable under that heading, if it retains the character of hook and eye. The eye and hook retain their character even after being placed on the cloth plastic leather strip. The bra cannot be functional without hook and eye loop. It is manifestly clear that main function of the hook and eye is to fasten the bra and the strips are only used for holding them - This classification is also based on HSN description, accordingly, we find that the classification of hook and eye more appropriately covered by 83 081010 by adopting the international classification also. The ld. Tribunal in the case of Gosai Trading Company [2007 (5) TMI 33 - CESTAT, KOLKATA] had not an occasion to examine the issue above the classification of the impugned good in detail considering the Section, Chapter and Heading entries vis-a-vis HSN Explanation and other Tariff clarification internationally decided. In view of that, we treat the ratio laid down in the Gosai Trading case as per incuriam and respectfully disagree with the same. The classification of the hook and eye fastening strips, imported by the appellant will be rightly covered under heading 8308 10 10 - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (1) TMI 927
Proposal for rehabilitation - company was declared as a sick industrial company - application before BIFR - BIFR sanction scheme - applicant-company claimed recovery from the respondent-Board - Held that:- Scheme under implementation under sub-section (12) of section 18 of the Sick Companies (Special Provisions) Act, 1985 shall be deemed to be approved plan under subsection (1) of section 31 of the Insolvency and Bankruptcy Code, 2016 and the same has to be implemented as per the provisions of Part II of the Code. There is no dispute to the fact that order of the BIFR sanctioning the scheme is not appealed against by the respondent herein or by any other stakeholders. At page 122 of paper book, the company had produced copy of application filed by them before the BIFR. The BIFR's order is produced at page 128. It is "The company is discharged from perview of the SICA/BIFR (iii) All creditors, statutory authorities are at liberty to recover their dues, if any, according to sanctioned scheme (v) Unimplemented portion of the sanctioned scheme would be implemented by all concerned " There is no challenge to the above order passed by the BIFR. It is not in dispute that as per the sanctioned scheme the Jharkhand State Electricity Board directed to waive penal interest, compound interest, simple interest and liquidated charges. The respondent-Board is bound by the above order. Now, they cannot claim recovery of sum of ₹ 14,12,000 (rupees fourteen lakhs twelve thousand only) from the applicant-company. Hence, all order passed by the respondent-Board or its competent officer on June 22, 2017 are held to be not tenable under the law. They have to be set aside. Oder:- It is declared that the respondent-Board (Jharkhand State Electricity Board) is bound by sanction scheme dated May 25, 2012 and cannot claim recovery of any amount from the applicant-company as per order dated June 22, 2017 passed by its certificate officer. The applicant-company's claim of recovery of ₹ 5,00,000 (rupees five lakhs only) from the respondent-Board stands rejected.
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2019 (1) TMI 926
Oppression and mismanagement - maintainability of transfer of shares from Respondent No.4 to Respondent No.3.- status of payment of remuneration to the Appellant - siphoned off the money in the name of salaries of Directors - Held that:- No doubt as per Sub-Section (9) of Section 309 of the old Act, the provisions regarding remuneration of Directors under the old Act was not applicable to private companies unless it was subsidiary of a public company. But then, it has been argued by the Counsel for Appellant that keeping the yardsticks as found in these provisions and capital of the Respondent Company in view, the remuneration which Respondents 2 and 3 took could not have been more than ₹ 1,25,000/- per month but each of them took more than ₹ 3 Lakhs per month. As argued that Respondents 2 and 3 in this manner siphoned off the money to themselves in the name of salaries of Directors by shutting out the Appellant from participating and then not declaring any dividends. We find that the submissions are not without basis. The Respondents have to act in trust and they cannot deprive the Appellant, one third shareholder in the Company by neither giving him participation nor remuneration nor dividends. Such diverting of profits to salary and not declaring dividends, in the facts of the matter, must be held to be oppressive of Appellant. Going through the reasonings recorded, we do not think that the learned NCLT appreciated the matter in proper perspective. The Petitioner who had himself fairly put up all the e-mails and copies of the Board Resolutions, which Respondents 2 and 3 brought about by way of majority, has been presumed to be in the wrong. The very fact which is admittedly on record and which shows that when the relations strained, the parties did sit down together and on 2nd January, 2014 (Appeal Page – 213). Board Resolution was passed to appoint Valuer of the Company including of tangible and intangible assets and liability and Vani Consultants Private Limited was assigned the job, shows admitted position between the parties that they did accept between themselves that they could no longer continue together and need to split. The Valuation Report is of July, 2014. According to the Appellant in spite of receiving the Valuation Report, the Respondents did not act upon the same and it was not placed before the Board. Respondents 2 and 3 did act oppressively with the Appellant before Company Petition was filed as well as during pendency of the Company Petition and for such acts of theirs there was tacit consent of Respondent No.4 and thus he is also guilty of oppression. We find that winding up of the Company would unfairly prejudice the members of the Company but otherwise the facts justify making a winding up order on the ground that it is just and equitable that the Company should be wound up. We set aside the transfer of shares from Respondent No.4 in favour of Respondent No.3. The Appellant is entitled to function as Director and is entitled to remuneration as Director equal to what has been paid to Respondent No.3 from August, 2014 till his shares are purchased by Respondent Nos.2 and 4 from the funds of the Company. We remit back the matter to NCLT, Kolkata Bench. NCLT will first give opportunity to the Respondent Nos.2 and 4 to purchase shares of the Appellant of Respondent No.1 company on the basis of Valuation Report (Annexure A-11) (filed in this Appeal with Diary No.2428) within time preferably of 3 months (or as may be specified by NCLT). If the Respondents 2 and 4 fail to purchase the shares of the Appellant in time as may be specified by NCLT, opportunity will be given to the Appellant to buy out, in time to be specified by NCLT, the shares of Respondents 2 and 4 in which contingency he would be entitled to purchase the shares of Respondent No.2 and 4 on a discount of 5% on the value as specified in the Valuation Report. NCLT may pass any and further suitable Orders deemed fit in the context, and matter. Parties to appear before NCLT, Kolkata on 19.11.2018.Respondents 2 and 3 each will pay costs of Appeal ₹ 1 Lakh each to Appellant from their own sources.
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Insolvency & Bankruptcy
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2019 (1) TMI 928
Corporate insolvency process - proof of outstanding debt - main contention raised in the reply filed vide diary No.1968 dated 04.06.2018 by the corporate debtor is that it has always disputed the amount/invoices on account of supply of sub-standard material - Held that:- Affidavit dated 21.02.2018 (Annexure-13 of the petition) has been filed by Sh. Sanjeev Khurana, Assistant General Manager of the operational creditor that the corporate debtor has neither disputed the existence of or amount of un-paid operational debt within the period specified by law nor provided the details of the pendency of the suit or arbitration proceedings in relation to any such dispute filed and further, there is no notice given by the corporate debtor relating to a dispute of the un-paid operational debt. We find that the affirmation made in the affidavit remain unrebutted by the corporate debtor in the reply filed. The conditions provided for in Section 9(5)(i) of the Code are satisfied and we therefore admit the petition filed by the operational creditor Ashapura Perfoclay Limited for initiating corporate insolvency resolution process in the case of the corporate debtor Mahabir Techno Limited.
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Service Tax
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2019 (1) TMI 917
Service tax audit - Jurisdiction post GST era - Sections 173 and 174 of the GST Act of 2017 - Held that:- The provisions of Chapter V of the Finance Act, 1994 stands omitted by Section 173 of the Act of 2017 save as otherwise provided under the Act of 2017. Therefore, if any provision of the Act of 2017 allows the applicability of the Chapter V of the Finance Act, 1994, then notwithstanding the omission of the Chapter V of the Finance Act, 1994 under Section 173 the same continues to apply - Section 174 is the repeal and saving provisions. Sub-Section 1 of Section 174 repeals the provisions of the various statutes as mentioned therein. Sub-Section (2) of Section 174 stipulates that, notwithstanding the repeal of the Acts mentioned in Sub-Section (1) of Section 174 and the amendment of the Finance Act, 1994 to the extent mentioned in Sub-Section (1) of Section 174 or Section 173, it shall not affect any pending investigation, enquiry, verification or other legal proceedings and that, such proceedings may be instituted, continued or enforced as if such Act had not been repealed. Prima facie, reading Sections 173 and 174 of the Act of 2017 it appears that, an enquiry or an investigation or even a legal proceeding under the Act of 1994 is permissible notwithstanding the coming into effect of the Act of 2017. The authorities are proposing undertake an audit for the period when the Act of 1994 was applicable.
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2019 (1) TMI 916
Valuation - activity of re-treading of motor vehicle tyres - reduction of cost of goods on which VAT has paid - Demand of service tax - penalty at the rate of 1% of the demanded service tax - management, maintenance or repair services - It is the case of the Petitioner that the Petitioner also pays the sales tax/VAT on the portion of gross receipts representing the value of goods and materials sold by way of consumption in carrying out the activity of re-treading of motor vehicle tyres in terms of Goa Value Added Tax Act - Constitutional validity - Section 35F of the Central Excise Act, 1944 - Held that:- In the present case, the Petitioner had produced documentary proof by way of Cost Accountant's Certificate, clearly indicating the details and value of the goods and materials which formed the subject matter of sale/deemed sale. Further, in this case, the Petitioner had produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the Petitioner was in fact assessed to and levied sale tax/VAT to the local Sale Tax/VAT Authorities. The Petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities. - there was absolutely no justification on the part of the Commissioner in denying the Petitioner the benefit of exemption under Notification No. 12/2003-ST. Since, we are satisfied that the impugned order dated 14 October 2016 is required to be set aside, there is no necessity of deciding on the constitutional validity of Section 35F of the said Act.
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2019 (1) TMI 915
Maintainability of petition - availability of statutory appellate remedy - Held that:- Since the petitioner has chosen to pay the tax liability and interest and they are aggrieved only against the imposition of penalty, this Court is of the view that an opportunity may be given to the petitioner to agitate the matter before the Appellate Authority, by filing a regular appeal. Therefore, without expressing any view on the merits of the contentions raised by the petitioner as against the imposition of penalty, this writ petition is disposed of by granting liberty to the petitioner to file a statutory appeal before the concerned Appellate Authority - petition disposed off.
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2019 (1) TMI 914
Penalty u/s 76 and 78 of FA - payment of service tax made on being pointed out - invocation of section 80 - intent to evade or not - services provided by them to various Government Undertakings - Held that:- It is an admitted fact that the service tax evasion was detected by the department after undertaking an investigation. It also appears that the appellant came to know about service tax not being paid by his authorized person Shri Abhishek Kumar only after initiation of the investigation. It is also an admitted fact that as soon as the appellant came to know about non-filing of service tax returns as well as non-deposit of service tax by the authorized person Shri Abhishek Kumar, the appellant deposited an amount of ₹ 44,28,835/- before the issue of the show cause notice and the balance amount of about ₹ 28,55,083/- was deposited subsequently after issue of the show cause notice as well as after the matter was adjudicated by the Adjudicating Authority. The appellant did not commit fraud nor was there any mis-statement or suppression of the facts with an intention to evade payment of service tax as he was regularly paying the required amount of the service tax to his authorized representative. This indicates that there was no intention on the part of the appellant to evade payment of service tax - it was not appropriate to impose penalty under Sections 76 and 78 on the appellant - penalty not imposable - demand of service tax with interest upheld - appeal allowed in part.
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2019 (1) TMI 913
Applicability of mandatory provision of pre-deposit - Section 35 F of Central Excise Act - whether the amendment in Section 35F of the Central Excise Act would apply to the impugned appeal? - Held that:- The bare perusal of Section 35 of CEA makes it clear the wording is unambiguous. It opens with the words “the Tribunal or Commissioner (Appeals) as the case may be, shall not entertain any appeal unless the appellant deposits the percentage of demand a duty as is stipulated in clauses (i), (ii) of (iii) there under. The section further makes it clear that the amended provision would not apply to the appeals and the stay applications already pending before the appellate authority prior to the commencement of the Finance Act No.2 of 2014 dated 6th August, 2014. Thus, it becomes abundantly clear that the amendment for sure will apply to all the appeals filed on or after the said date (06.08.2014) - In the present case, admittedly, the impugned appeal has been filed after the said amendment. The lis for the purpose of Section 35 F begins with the filing of appeal before CESTAT and the Tribunal has to apply the second proviso to the amended Section 35 F of Central Excise Act. Apparently that appeal has been filed after 6th August, 2014. Resultantly, the amended section 35 F shall be applicable to the impugned lis - application disposed off.
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2019 (1) TMI 912
Valuation - commercial coaching or training services - inclusion of amount of concession in the name of scholarship given by the appellant to its various students in assessable value - non-monetary consideration - Section 67 of the Finance act, 1994 read with Rule 3 of Service Tax Valuation Rules, 2006 - Held that:- The matter is no longer res-integra and it has already been decided by this Tribunal in M/S RESONANCE EDUVENTURES PVT. LTD., SHRI R.K. VERMA, MANAGING DIRECTOR, M/S ALIEN CAREER INSTITUTE VERSUS CCE & ST, JAIPUR [2017 (11) TMI 1276 - CESTAT NEW DELHI], where it was held that there are no reason to consider the concessional portion of fee which is as per the pre-declared publicity material, as part of non-monetary consideration requiring addition to the monetary consideration to arrive at the gross value - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 911
Classification of services - Real estate agent services or not - part consideration paid as earnest money and part was prayed to be paid before the Sub-Registrar at the time of registration of sale deed - transfer of sale deed to ultimate purchaser - Held that:- Though appellant initially got an agreement executed by the owner of the property in his favour holding him to be the purchase of the land. But immediately thereafter he entered into another agreement, on behalf of the owner for re-sale of the plot in favour of someone else that too at much higher prices. This fact is sufficient to hold that appellant has not merely entered into an agreement as a party thereto, but in fact has engaged himself in rendering the services of sale of the property in favour of someone else irrespective that agreement to sell was initially executed in his favour. The aforesaid definition of real estate agent in Section 65 (88) of the Act makes it clear that it is not merely the real estate consultant but any person who facilitates getting any property /real estate sold, purchased, leased out or rented out shall be called as real estate agent and the services rendered by him under said capacity shall be taxable under Section 65 (105) (v) of the Act. Thus, the arguments of the appellant are not sustainable. There seems no justification for any bonafide misapprehension/ misconception on the part of the appellant as far as the definition of real estate agent is concerned - Appeal dismissed - decided against appellant.
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Central Excise
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2019 (1) TMI 910
Rectification of Mistake - the Tribunal held that order-in-original dated 27.2.2014 cannot be sustained for the reasons recorded in the order, however, in the interest of public exchequer, the Tribunal chose it fit to remand the matter to the authorities to ascertain as to whether Village Antalia where the premises of the appellant is located was falling under the rural area so as to be eligible and justified in adopting the procedure and seeking exemption - Held that:- The plain and simple reading not only of the order impugned in the appeal proceedings dated 13.10.2015 but the order passed in rectification of mistake application dated 29.4.2016 would also clearly indicate that the Tribunal proceeded on the clear aspect as canvassed and not disputed by the authorities that the goods have actually been exported. The circular and the notification pressed into service unequivocally indicate that the petitioner would be entitled to exemption based upon the location of the manufacturing unit of the petitioner in which the specified goods were manufactured, and in the proceedings of Special Civil Application, when the competent authority has placed on record in unequivocal terms the aspect that the petitioner s unit is located in rural area or is not located in the area which is prescribed in urban or mentioned areas then the entire controversy should rest and need not be probed further as would otherwise amounting to creating further complication, and thus, this court is of the considered view that the Tribunal also having recorded the unequivocal submission of the authorities qua the actual physical export and when having recorded its finding regarding unsustainability of the order-in-original dated 27.2.2014 the remanding of the matter in facile ground of public exchequer leaves much room to the comment upon. Suffice it to say that the said ground did not warrant in remanding of the matter and hence we are of the view that the said order itself was not sustainable and requires to be quashed and set aside - petition disposed off.
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2019 (1) TMI 909
Clandestine manufacture and removal - plastic molded chairs - burden of proof to establish that there was clandestine manufacture - seizure of the pen drive - correctness of the Mahazar - dependability of Mahazar witnesses - maintainability of evidence. Held that:- The Department could prove to a reasonable extent that the appellants have indulged themselves in clandestine removal. The same issues have been elaborately discussed in the OIO giving reference to various evidences like documents recovered and statements recorded - The appellant’s contention with regards to the manner of search and seizure may be relevant in a criminal proceeding but not certainly in quasi-judicial proceedings. The Revenue for understandable reasons cannot prove everything with an arithmetical precision. What is required is to prove the allegation with reasonable amount of evidence which could logically be extended to the entire activity. The seizure of estimates from the residence of Shri K.K. Ibrahim and from the dealers like M/s. Greenfair go to prove that the arguments of the appellant on the pen drive are not substantiated. Among the date contained in the seized pen drive, there were estimates, sales register (month-wise), purchased register of chemicals, purchased register of RP and cash book etc. Evidences were available about the purchase of chemicals from M/s. Plastic Industries, Mumbai and M/s. Pinks Enterprises, Allwaye etc. It has been established that the appellants have been purchasing RP (recycled plastic) from their sister concerns, Karothukuzhy Plastics and Karothukuzy Plastic Industries and others like A to Z Traders and Marketing etc. The same was confirmed by Smt. Aswathy, Office Assistant of the appellants - it is incorrect to say that the Department has not established clandestine manufacture. It cannot be expected that all evidence will be contained in the records seized as the records are likely to be destroyed in all probability particularly in the case of clandestine manufacture and removal. Seizure of “Periyar” brand of plastic chairs and stools from M/s. Green Fair Marketing on 16.01.2006 is one of the clear evidences for clandestine manufacture and clearance. Therefore, in view of the facts of the case, it is found that Department has established clandestine manufacture to a reasonable extent. Further, sale and recovery of additional consideration has been clearly established from the evidence gathered from the print outs taken from the pen drive, statements of company officials and statements of drivers, dealers etc. Therefore, the appellant’s contention is not acceptable. Appeal dismissed - decided against appellant.
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2019 (1) TMI 908
Valuation - quantum of discount to be reduced - It was contended by the Department that the appellants are remunerating the re-sellers with 1% trade discount included in the 30% trade discount. The effective trade discount is only 29% and 1% being the remuneration for the services rendered by the re-sellers appears to be in the form of a commission and not a trade discount. - Section 14 of the Customs Act read with Rule 3 of the Customs Valuation Rules, 1988 - extended period of limitation. Held that:- These discounts are not in the nature of discounts as understood in the common parlance. They are directly or indirectly an expenditure to the appellants. The remuneration due to the wholesalers is given in the form of discounts. Therefore, these add to the cost of the products that the appellants are selling. More so, in respect of the EHTP unit the clearances made to the wholesalers in the domestic market are in the nature of imports by the wholesalers - Therefore, all the amounts paid or payable by the wholesalers form part of the” transaction value” for the purpose of the wholesalers in terms of Section 14 of the Customs Act, 1962. Whether the 3 SCNs under consideration are barred by limitation? - Held that:- The appellants have been regularly filing their monthly ER-1 Returns indicating the quantities of computers manufactured and cleared every month, the details of invoices raised during the said month and the total value of clearances affected during the month in question. Department has already issued a SCN dated 26.03.2001 for the period April 1999 to Sept. 2000 to the appellants for the very same issue - when the Department is quite aware of the activities of the appellants, no suppression, nonetheless of a material fact with intent to evade payment of duty can be alleged - the SCNs are barred by limitation. Matter remanded back to the Original Authority for confirmation of duty for the normal period.
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2019 (1) TMI 907
Clandestine removal - 448.025 M.T. of steel ingots - suppression of production of iron and steel ingots which was calculated on the basis of average electricity consumption in the process of manufacture - Held that:- The confirmed demand in this case is fully based upon the entries which were found made in the record of M/s Mono Steels, who is a commission agent for the sale and purchase of the iron ingots - Since, no findings have been given in the order-in-original about clandestine manufacture, clearance and further sale of same in this case and the entire demand is solely based on the record of a third party and statement of certain persons who have not been cross-examined. The demand on the appellant and the penalty on the appellant is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 906
Valuation - annual capacity of production - abatement of duty - closure of factory - intimation of closure filed timely - whether the appellants are entitled for abatement of duty as provided sub-section (4) of Section 3A of Central Excise Act, 1944? - Held that:- We do not find that the appellants have opted for the operation under Rule 96ZP. The Revenue did not produce any evidence to contradict the same. We find that there is a provision under Section 3A(4) for redetermination of amount of duty where the assessee claims that the actual production of notified goods in his factory is lower than the production determined under sub-section (2). Hon’ble Supreme Court in the case of M/S. BHUWALKA STEEL INDUSTRIES LTD. & ANOTHER VERSUS UNION OF INDIA & OTHERS [2017 (3) TMI 1357 - SUPREME COURT OF INDIA] has laid emphasis on the fact that the conditions of Rule 96ZP are not eternal. If the appellant has to pay duty even when there was no production in the factory, it leads to illogical conclusions. The provisions of Rule 96ZP do not take away the right of the assessee from exercising a facility given under Section 3A. It is found that in case the appellants have not opted for Rule 96ZP, they are governed by Section 3A(4) and the authorities are bound to examine their claim of closure of the factory and to give abatement of the duty - There is nothing shown on record that the appellant’s request was considered by the Revenue and an order has been passed after giving a due opportunity to the appellants. Therefore, there is no merit in the order passed by Commissioner (A) - the contentions of the appellant is correct that they are liable to pay duty for the period of 58 days and accordingly, the balance duty of ₹ 1,23,990/- is confirmed - penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 905
Restoration of appeal - condonation of delay - appeal dismissed for non-compliance with pre-deposit - Held that:- The appellants appeal was disposed of in the year 2006 directing them to deposit an amount of ₹ 15 lakh within a period of 8 weeks. Instead of depositing the said amount, the appellant kept silent. It was further noticed that if the appellants were not in a position to deposit the amount in question, they should have approached the Tribunal at that point of time only seeking further extension of time to deposit the amount or they could have challenged the said order before the higher forum. It cannot be left to the whims and fancies of the appellant to deposit the amount as and when they wish. The appellants having not taken any further steps to challenge the said order of the Tribunal, the same has attained finality. The deposit of the amount in question after a period of 12 years cannot revive the assessee’s right to get the matter afresh either before the Tribunal or before the Commissioner (Appeals). Application for restoration of appeal dismissed.
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2019 (1) TMI 904
Ara based exemption - denial of benefit on the ground that basic and mandatory requirement of the Notification No.50/2003-CE dated 10.06.2003 not fulfilled - Held that:- The ld. Commissioner has given cogent finding that the respondent in the year 2007-2008 brought capital goods from the Noida Unit worth ₹ 3.50 thousand. Further, they have shown purchase in that year worth ₹ 1.50 lakh and further, they have incurred expenditure on wages and power-fuel. Further, they have also cleared the goods manufactured by them. As such, the evidence of commercial production is established. It is also held that the appellant had given due intimation to the Revenue dated 14.01.2013 along with copy of clearance dated 4.01.2013. There is no adverse inspection report or finding to the facts as contended by the assessee, and as such, the denial of exemption is without any basis - appeal dismissed - decided against appellant.
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2019 (1) TMI 903
CENVAT Credit - input services - services used in the employee hostel and other repairs and maintenance in the plant - Held that:- Major part of the credit relates to repair and maintenance which is definitely admissible as cenvat credit and is not excludible under the exclusion clause Rule 2(l) for the purpose of civil construction - credit allowed. Validity of SCN - invocation of extended period of limitation - Held that:- From the allegations in the show cause notice it is evident that the appellant had maintained proper records, filed timely returns no case of concealment or contumacious conduct is made out - the extended period of limitation is not invocable - penalty also set aside - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 902
CENVAT Credit - inputs - cement used in mine for filling the pits after extraction of ore - denial of credit on the ground that there is no relation with the manufacture or clearance of the final product - Held that:- Perusal of record shows that there has been a permission under the aforesaid regulation in favour of the appellant vide which the appellant was permitted to conduct stopping operations of the ore block by making use of impugned cement and the method of extraction shall be by VRM Stopping method post filled by mill failing mixed with cement in the ratio as prescribed therein. The permission specifically recites that extraction of ore from the proposed area shall be commenced only after proper settlement and consolidation of the fill of stopped out ore block, immediately below the proposed ore block. Perusal of these clauses in the permission by the mines department in favour of the appellant makes it abundantly clear that filling of the open ore pits with cement was a mandatory prerequisite for the appellant to extract ore - the cement used herein is something which has relation, though indirectly, with the extraction of ore thus it qualifies for input as defined under Rule 2(k), prevailing during the relevant period. Without filling of the ore pits the appellant was statutorily, not in position to extract the ore, i.e. the final product thus, the use of cement was very much in relation to the manufacture, which was extraction of ore - the appellant is entitled to treat the same as input. Thus, the adjudicating authority below has committed an error while denying the credit on cement used by appellant in filling pits for making area fit for ore extraction - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 901
Abatement of duty - manufacture of Chewing Tobacco - sealing of machinery/machinery not functioning for part of the month - duty to be paid for full month or part thereof - Rule 10 of the CTD Rules - entitlement for suo moto abatement for the period - Held that:- The ruling in the case of Shiv Shakti Agrifood Pvt. Ltd. [2018 (4) TMI 764 - CESTAT NEW DELHI] is per incuriam as the said ruling has been passed without taking notice of the provisions of the Rule 9 Fourth Proviso and also the earlier precedent judgments of this Tribunal and it was held that Other than Rule 10, there is no provision for charging duty on pro-rata basis in respect of machines which, for the reason of being sealed, were operating only during part of the month. In a subsequent order under similar facts and circumstances with the same assessee Single Member Bench of this Tribunal in M/S ARORA TOBACCO PVT. LTD. VERSUS CCE, JAIPUR-I [2018 (5) TMI 1199 - CESTAT NEW DELHI], has followed the earlier ruling of SA Freshner Pvt. Ltd. [2018 (3) TMI 18 - CESTAT NEW DELHI] and have held accordingly in favour of this appellant assessee by holding that it cannot be said that the appellant is not entitled for the refund/abatement under 4th Proviso to Rule 9 of the CTD Rules. Suo-moto entitlement of abatement - Held that:- Hon’ble Gujrat High Court in the case of Thakkar Tobacco products Pvt. Ltd. [2015 (2) TMI 606 - CESTAT AHMEDABAD] held in favour of the assessee and the said ruling has been accepted by the Revenue as is evident from Circular No. 1036/2/2018 dated 16th February 2018. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 900
MRP based Valuation or transaction value - manufacture of chewing tobacco which is being cleared in multi-piece packages - short payment of duty - Department alleged that chewing tobacco is an excisable commodity hence the provisions of Section 4A of the Act instead of Section 4 thereof shall apply - Held that:- The issue herein is no more res integra. This Tribunal in Gupta Tobacco Company [2012 (1) TMI 247 - SUPREME COURT] case has already held that chewing tobacco was not capable of being sold in numbers but were sold in weights of 6, 8 and 9 gram pouches. There is no requirement for MRP under SWM Rules. Chewing tobacco no doubt is chargeable to duty being classifiable under Chapter 2403-99-10 of Central Excise tariff Act, 1985 but there is no apparent Notification of the Government as is a mandate under Section 4A for the goods herein. Hence, Section 4A is not applicable upon the assesse. The retail packages in the present case were exempted from declaring the retail price being less than 10 grams in weight. There was no need for assesse to declare the price on the multi piece package which actually was a wholesale package. The wholesale package requires the declaration only about the name and address of the manufacturer/ packer, the identity of commodity contained in the package and the total number of retail packages contained in a wholesale package or the net quantity. Once there was no such requirement of declaring MRP, the question of valuation in accordance of Section 4A of the Act does not arise. Commissioner (Appeals) has rightly interpreted the provisions of the Act holding that Section 4A is not applicable to the given facts and circumstances no question of short payment, as alleged, at all arises - appeal dismissed - decided against Revenue.
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2019 (1) TMI 899
Valuation - inclusion of freight charges borne by the customer of the appellant separately in the assessable value - extended period of limitation - Held that:- It is on record that all such cases the freight element has been borned by the customer. The assessee has not paid any amount towards the freight charges. The CBEC Circular No. 988/12/2014-CX. dated 20.10.2014 has clarified in their circular that in such a situation the freight charges are not to be included in the assessable value - This issue is also decided by the various Court and Tribunal that when the factory gate price is available and freight is borned separately by the customer in view of the decision cited supra, the same is not includible in the assessable value. Extended period of limitation - Held that:- It is on record that the demand has been raised as per the audit objection and the entire activity of appellant was known to the department - in this case the entire demand is also time barred as the extended period is not available to the department. Appeal allowed on merit as well as on limitation.
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CST, VAT & Sales Tax
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2019 (1) TMI 898
Non-filing of Consignment dispatches - over-statement of inter-State sales - Section 6A of the CST Act - declaration of Form-F - rejection of turnover figures accounted for and reported in Form-I - levy of tax under CST - levy of penalty. Held that:- The appellant should have placed all the documents before the Assessing Officer promptly. But it appears that in the interest of justice, the appellant was given time to produce documents and the Appellate Assistant Commissioner in its order dated 18.08.2004 has stated that the appellant did submit documents. He has discussed all the documents in great detail and passed a reasoned order. It was, therefore, necessary for the Tribunal to discuss those documents and give a finding whether those documents disclose the required details or not. It is possible that the documents in a particular format may not have been produced but if the details can be gathered from some other documents like consignment agreements, Form F declarations, sale pattials etc. which according to the Appellate Assistant Commissioner have been produced, they may, perhaps, serve the purpose. While the Tribunal states that consignment transfers are not reflected in the books of accounts, Counsel for the appellant has contended that this is a wrong statement. The book of accounts and the annual returns do disclose the turnover regarding consignment transfers. This aspect needs to be looked into. The burden of proving that the movement of goods was occasioned not by reason of sale is on the dealer and to discharge this burden he must furnish to the assessing authority a declaration duly filled by the principal officer of the other place of business of the dealer along with the evidence of despatch of such goods. The assessing authority to whom such a declaration is furnished has to then make an enquiry to find out whether particulars contained in the declaration furnished by the dealer are true. If upon making such an enquiry, the dealer is satisfied that there is no inter-State sale, he may at the time of, or at any time before the assessment make an order to that effect and the movement of the goods to which such declaration relates shall then be deemed for the purpose of the CST Act to have been occasioned otherwise than as a result of sale. Such order can be passed before the assessment or along with the assessment. In the event, the dealer fails to furnish such declaration by reason of legal fiction such movement of goods would be deemed for all purposes of the CST Act to have been occasioned as a result of sale. After receipt of Form ‘F’ declaration, it is the duty of the Assessing Officer to verify and satisfy himself that the particulars contained in the declaration furnished by the dealer are true. During this enquiry, it is open to the Assessing Officer to require the dealer to produce all relevant documents or other papers or materials which are germane or relevant to find whether the particulars contained in Form ‘F’ declaration are true. There are no hard and fast rules or rigid formulas which the Assessing Officer can follow while deciding the claim of stock transfer. The Assessing Officer will have to consider all the documents such as consignment agreements, sale pattials, Form F declarations and the attendant circumstances and come to a conclusion whether the claim of stock transfer is genuine or not. If almost in all transactions the consignments are found to have been sold in the same quantity in which they were sent on the same day or on the next day, it may be a pointer to inter-State sale. If regularly the goods are not offloaded at the agent’s premises or directly sent to the buyer that could be another pointer to inter-State sale because such repeated transactions cannot be described as a co-incidence. But one circumstance by itself may not be sufficient. At the cost of repetition, it must be stated that the Assessing Officer has to take an overall view of the matter and draw his conclusion. The Appellate Assistant Commissioner in his order dated 18.08.2004 has referred to number of documents furnished by the appellant. The Tribunal, in the impugned order, has, however, not discussed them but come to the conclusion that the documents were not so furnished. The record does not show that the Assessing Officer has conducted any enquiry to find out whether Form ‘F’ declarations are true or not. In the circumstances, in the peculiar facts of this case the only course left to this Authority is to remand the matter not to the Tribunal but to the Assessing Officer who will be better equipped to go through all the documents and to examine whether the appellant’s claim is genuine or not. The matter is remanded to the Assessing Officer. The Assessing Officer shall consider all the documents filed by the appellant - appeal allowed by way of remand.
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2019 (1) TMI 897
Cononation of delay of 49 days in filing appeal - it is claimed that delay is caused due to administrative reasons - discrepancy in the date of receipt of the impugned order - wilful delay or not? - Held that:- There is substance in the contention of Ld. Counsel for the respondent that there are discrepancies in the appellant’s application and affidavit. The appellant has not taken care to file proper affidavit in this Authority. The appellant ought to have been more careful. However, having considered the explanation offered by the appellant and examined in the light of Section 20 of the Central Sales Tax Act, 1956, I am of the opinion that the delay needs to be condoned - It appears that delay is caused because of administrative exigencies. The appellant has made out sufficient cause which prevented it from filing the appeal in time. Copy of the impugned order received by the appellant bears a stamp qua on which date 10.08.2015 is mentioned. So the impugned order is received by the appellant on 10.08.2015. If that is so then appeal filed by the appellant on 30.12.2015 before this Authority is within the extended period of 150 days. The extended period is contemplated in the first proviso to Section 20(3) of the CST Act as quoted above. Thus, It is not possible to come to the conclusion that the appellant is guilty of any sharp practice or has willfully suppressed or concealed material facts - Since the appellant has made out sufficient cause, the delay is condoned - application allowed.
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2019 (1) TMI 896
Inter-state sale or not - appellant claimed deduction towards consignment sales - suppression of facts - reopening of assessment - Held that:- The Assessing Officer came to a conclusion on inspection that inter-state sale under Section 3(a) of the CST Act has been camouflaged as consignment sale under Section 6A of the CST Act. Thus it is only when the Assessing Officer came to a conclusion that there was deceit or misrepresentation that it sent a notice of revision. Therefore no fault could be found with the revision of assessment proceeding. However, taking an overall view of the matter I feel that the Tribunal while remanding the matter to the Assessing Officer should have left the Assessing Officer free to come to his conclusion after taking into consideration all the relevant circumstances independently and in accordance with law - In all fairness, after remand the matter needs to be examined independently and in accordance with law. It is, therefore, necessary to give a direction to the Assessing Officer to carry out the exercise independently and in accordance with law after taking into consideration relevant documents and all attendant circumstances. Penalty - Held that:- The turnover relating to consignment sales is reflected in the books of accounts of the appellant and the appellant has claimed exemption in respect thereof in monthly returns. It is urged that because the Assessing Officer takes a different stand in the assessment order to reverse the claim that cannot be a valid ground to impose penalty under Section 12(3)(b) of the TNGST Act. This submission will have to be taken into account by the Assessing Officer. It appears that this submission was made before the Tribunal but it did not receive proper attention from the Tribunal. It needs to be independently considered. The Assessing Officer is directed to consider the individual transactions of the appellant with Bhuwalka Trade Links (P) Limited afresh independently and in accordance with law - matter on remand.
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2019 (1) TMI 895
Grant of stay - Levy of Sales Tax - branch transfer - goods dispatched from the appellants’ integrated Steel Plant at Rourkela to its branches - Time Bound Supply Scheme - inter-state sales or not? - no ‘C’ Forms were produced - Held that:- The total demand is ₹ 108,70,20,638.00. According to the contesting respondent the appellant has deposited ₹ 513,035,699.00 and balance tax due is ₹ 573,984,939.00 According to the appellant it has deposited ₹ 51,27,04,438.00 and the balance tax due is ₹ 57,43,16,200.00. The total local taxes paid by the appellant are stated to be ₹ 452,11,04,863.00. If this amount is added to amount deposited by the appellant as per various Court orders, the amount so arrived at exceeds the impugned demand - Counsel for the State of Orissa submitted that she has no instructions as to how much local sales tax the appellant has paid. It is not possible to accept this submission. The State of Orissa ought to have gathered these details. It was given time to take instructions on the tables submitted by the appellant. It has failed to do so. In such circumstances, I accept the statement made by Counsel for the appellant in this behalf which is supported by the tables submitted by him. The substantial amount has been deposited by the appellant. This is borne out by the tables submitted by the appellant. Even as per the table submitted by the State of Orissa, the appellant has deposited substantial amount. Payment made towards local sale taxes is also substantial. It bears repetition to state that if that payment is taken into consideration, the appellant has deposited more than the amounts covered by the impugned demands. For the Assessment Year 1992-1993, the Supreme Court had granted protection to the appellant by its order dated 16.03.1998 - this is a fit case where the impugned judgment and order needs to be stayed during the pendency of the instant appeals - application disposed off.
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2019 (1) TMI 894
Denial of Issuance of statutory Form C - inter-state purchases of goods - transit purchases under Section 3(b) of the Central Sales Tax Act, 1956 - second sale - Section 6(2) of the Central Sales Tax Act, 1956 to be read with Central Sales Tax (Registration and Turnover) Rules 1957 - Held that:- Very limited is the scope for denial of grant of Form-C to the assessees like this petitioner for the purchase of the goods, which are mentioned, in the certificate of the registration, especially, when such goods are being purchased, either directly or through dealer, from the other States of India - In the facts of the present case, this petitioner, who is engaged in the manufacturing activity of iron and steel, is a registered dealer within the State of Jharkhand and has also been issued a certificate of registration (under section 7 of the Central Sales Tax Act, 1956). Varieties of goods have been mentioned in the certificate of registration. Narration of goods given to the dealer or the description of the goods given to the dealer for the purchase from rest of the States of India is not a contract of sale at all between this petitioner and the dealer nor it can be labelled as an agreement to sale between the present petitioner and the dealer. This type of narration has to be given of the goods to be purchased by the dealer so that accurately the dealer can purchase those goods from rest of the States of the country. The respondent-State authorities have treated this information given by the petitioner to the dealer as a sale itself which is an error apparent on the face of the record. For this purpose grant of Form-C has been denied - This cannot be a reason for the State for denial of Form-C to this petitioner. There is a conceptual error committed by the respondent-State which needs to be clarified. The goods which are mentioned in the certificate of registration is required to be purchased by the dealer - Nonetheless, the fact remains that petitioner is not purchasing the goods directly from the other states, but, this petitioner is purchasing the goods which are mentioned in the certificate of registration through a dealer from other States. It may happen that sometimes the goods which are to be purchased by the dealer may not be in existence. Sometimes it may happen that the goods which are to be purchased through dealer is/are yet to be ascertained. Even if there is an agreement to sale between the petitioner and the dealer prior to the purchase of the goods by the dealer from the manufacturer who are situated in other States of the country and if the property in the goods are being transferred by the dealer to the petitioner after purchase of the goods through transit of those goods, such type of transaction is covered by Section 3(b) of the Central Sales Tax Act, 1956. The respondent-State has not properly appreciated the difference between sale and agreement to sale and therefore, they are denying the grant of Form-C to this petitioner which is not permissible in the eye of law. Agreement to sale is converted into sale in the facts of the present case when an endorsement is made by the dealer of the goods who has purchased those goods from the manufacturer of the other States during transit of the goods. Such type of transaction is covered under Section 3(b) of the Central Sales Tax Act, 1956 and hence, the petitioner is entitled to the benefit of exemption of tax under Section 6(1) to be read with Section 6(2) of the Act, 1956 and the procedure is to be followed by this petitioner which has been referred under Section 8(1) to be read with Section 8(3) to be read with Rule 12(1) of the Rules, 1957. If Form-C is/are being misused, the penalty can be levied in accordance with aforesaid provisions of the Central Sales Tax Act, but, at the time of grant of Form-C neither this type of enquiry is permissible nor the State can decide the nature of the transaction whether it is falling under Section 3(a) or 3(b) of the inter-State sale or it is an intra-State sale and Form-C is being denied. Neither of these things can be done by the State. The State has to wait till the assessment of annual return is filed by the applicant of Form-C. The grant of Form-C cannot be denied by pre-judging the issue of nature of transaction - Unnecessarily the respondent-State has entered into the question that as there was a pre-existing or pre-determined or pre-decided contract of sale between the petitioner and the dealer of the goods and hence, Form-C is not granted. In the facts of the present case, the transaction is covered by Section 3(b) and this petitioner is entitled to avail the benefit of concessional rate of tax provided under Section 6(2) of the Central Sales Tax Act, 1956 - In the facts of the present case, as stated hereinabove, we are at the stage of grant or refusal of Form-C. Annual assessment is yet to be done and hence, the nature of transaction whether it is falling under Section 3(a) or 3(b) of the Central Sales Tax Act, 1956 or whether there is any difference in the price under Sugam-G form (road transport permit) and in the invoice issued by the dealer of the goods to the petitioner cannot be appreciated at the stage of Form-C. The respondent-State are directed that the application of the petitioner for supply of declaration in Form-C be considered and disposed of in accordance with law - petition allowed by way of remand.
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Indian Laws
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2019 (1) TMI 918
Dishonor of cheque - Insufficient funds - grant of Regular Bail - petitioner has been remanded for judicial custody for the reasons that after taking cognizance of complaint filed by complainant/respondent No. 2, bailable warrants as well nonbailable warrants issued against the petitioner for different dates were received unexecuted - Held that:- It has to be kept in mind that present case pertaining to the dishonour of cheque and petitioner, in a similar case No. 48 of 2017 titled Dharam Chand vs. Ramesh and Company has been released on bail on 14th December, 2018 by the trial Court on furnishing personal bond and surety bond, as directed by the Court, and also that purpose of bail is to ensure the presence of petitioner during trial, it would be appropriate to release petitioner on bail subject to conditions imposed by this Court with further liberty to the trial Court to impose further conditions as ordered hereinafter - petitioner is ordered to be enlarged on bail.
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