TMI Tax Updates - e-Newsletter
January 23, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Deduction u/s 10A/10B/ Chapter VIA not to be allowed in not claim in ITR u/s 139(1) - But, amendment or correction in the claim allowed - HC

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Articles

• GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XIX)
• Kerala HC stays collection of GST on Income Tax TCS amount

News

• CBDT identifies non-filers through Non-filers Monitoring System (NMS) by using Data Analytics and request the Non-filers to assess their tax liability for AY 2018-19 and file the Income Tax Returns (ITR) or submit online response within 21 days

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• The Insolvency and Bankruptcy Board of India organises Insolvency and Bankruptcy Awareness Programme at Vadodara, Gujarat

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• Commerce Ministry Invites Suggestions on Baba Kalyani Group Report on SEZ Policy

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• The Institute of Company Secretaries of India – Guidance Note on Dividend

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Notifications

Customs

• 3/2019-Customs (N.T./CAA/DRI) - dated 21-1-2019 - Cus (NT)
  Appointment of Common Adjudicating Authority by DGRI

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• 2/2019-Customs (N.T./CAA/DRI) - dated 21-1-2019 - Cus (NT)
  Appointment of Common Adjudicating Authority by DGRI

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• 1/2019-Customs (N.T./CAA/DRI) - dated 21-1-2019 - Cus (NT)
  Seeks to amend Notification No. 5/2016-Customs (N.T./CAA/DRI) dated 01.12.2016

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FEMA

• 22 (R)/(2)/2019-RB - dated 21-1-2019 - FEMA
  Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) (Amendment) Regulations, 2019

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SEZ

• S.O. 356(E) - dated 17-1-2019 - SEZ
  Central Government de-notifies an area of 134.79 hectares at Villages Talegaon and Panshil, Taluka-Khalapur and Village-Bhokarpada, Taluka-Panvel, District- Raigad, in the State of Maharashtra, thereby making resultant area as 5.04 hectares

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• S.O. 355(E) - dated 17-1-2019 - SEZ
  Central Government notifies an additional area of 3.14 hectares, as a part of above Special Economic Zone, thereby making total area of the Special Economic Zone as 5.77 hectares at Puppalguda Village, Rajendra Nagar Mandal, Ranga Reddy District, in the State of Telangana

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Highlights / Catch Notes

GST

• Transmission or distribution for electricity - scope of composite supply in GST era - the services provided by the petitioner are in the nature of composite supply in view of the provisions of clause (a) of section 8 of the CGST Act, the tax liability thereof has to be determined accordingly.
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• Transmission or distribution for electricity - Scope of bundled service - Service tax under negative list era - all the services are naturally bundled in the ordinary course of business of the petitioner and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character.
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• Nature and classification of supply of service - adoption and implementation of AM’s advertising policy, conducting sales promotion through exhibition trade, liaising with customer etc. - the services the applicant proposes to provide would fall under Group 99837 as Market Research Services.
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• Nature of supply of service - Support services or Intermediary service - applying the test mentioned in the Education Guide, held that, applicant is not a person who arranges or facilitate supply of services between two or more persons.
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Income Tax

• Liability to pay interest u/s 234B(2A) - retrospective legislation - sub-section (2A) to Section 234B would be applicable to all proceedings in which orders are pending and /or in which orders u/s 245D(4) are passed on or after 1st June, 2015.
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• Addition u/s 68 - unexplained money receipt in the form of share capital/share premium - The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment.
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• Constitutional validity - Section 80A(5) bars and prohibits the assessee from claiming the deduction u/s 10A and 10B and Chapter VIA if no such claim was made in the return of income. It is also mandatory that the return of income for claiming such deduction should be filed within the time stipulated u/s 139 (1) - The amendment made cannot be faulted and quashed on the ground that it was discriminatory, arbitrary, unreasonable and violative of Article 14 - However, amendment or correction in the claim allowed.
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• Disallowance on account of Director’s commission/bonus - He was not a shareholder when the bonus/commission was paid to him and once he is not a shareholder and commission/bonus paid for the services rendered, the provisions of Section 36(1)(ii) mandates that the bonus is to be allowed.
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• A mere fall in the GP Rate could only be a ground for making further in-depth inquiries but could not be by themselves a ground for rejection of books of account since in terms of statutory provisions of Section 145(3), the books could be rejected only in specified circumstances.
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• The penalty U/s 271AAB is sustained to the extent of cash found during the course of search and penalty is hereby directed to be deleted on rest all items of surrender made during the course of search in absence of the same qualifying as undisclosed income.
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• Condonation of delay in filing an appeal - levy of Late filing fees u/s 234E - intimations issued u/s 200A - delay condoned.
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• Disallowance of deduction u/s 48(i) - computation of capital gain - the expenditure incurred is wholly and exclusively in connection with the transfer of shares of the Indian Subsidiary. Hence, qualifies for deduction u/s 48(i).
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• Eligible for exemption u/s. 11 or 10(23C) - the dominant object of the assessee is to only develop the game of the cricket and not to carry any business activity directly or indirectly in the activities related trade, commerce, business. Therefore, assessee is entitled for claim of exemption u/s 11 and u/s 10(23C)(iv)
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• Estimation of income - AO has taxed the entire receipt from fish crates as income - the depreciation on crates and the interest attributable to acquiring the fish crates required to be allowed in the interest of justice.
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• Character of income - accrual of income - The cumulative effect of Section 145A(b) and Section 56(2) (viii) would be that any interest received on compensation or on enhanced compensation shall be taxable under the head 'income from other sources' in the year of receipt.
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• Reopening of assessment - Explanation 1 would not apply as all primary facts were disclosed, stated and were known and in knowledge of the Assessing Officer. Further, this would be a case of ‘ change of opinion’ as the assessee had disclosed and had brought on record all facts.
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• Reopening of assessment - The ‘reason to believe’ recorded cannot be set aside on the basis of the appellate order in the case respondent-assessee making substantive addition instead of protective additions made in the assessment order.
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Customs

• Import of Off Grade Copper Cathode under Advance Authorization - The phrase “before making the shipment” is only to be interpreted as before making the first export shipment and surely not before the receipt of the first import of raw material from overseas.
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• Valuation of imported goods - It is not the case of revenue that it is either a Hawala transaction or remittance of additional consideration by the respondent to the exporter, over and above the declared transaction value - the Adjudicating Authority has erred in rejecting the declared price/transaction value.
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• Import of ‘coconut oil’ against advance licence under the ‘Duty Exemption Entitlement Certificate’ - The license does not bar the import of ‘raw coconut oil’; neither the license nor the grounds of appeal adduce any importance to the range of 3% to 6% mandated in the license
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• Valuation of imported goods - addition of royalty charges to value of imported goods in terms of Rule 9(1) (c) of Valuation Rules, 1988 and 10(1) (c) of the Valuation Rules, 2007 - the issue of addition of Royalty Charges will be dependent on the terms and condition of Royalty agreement.
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• Valuation of imported goods - importer has submitted many documents to substantiate the value. Merely because the assessee failed to submit any payment certificate or Bill of Exchange, the AO rejected the value declared by the respondent/assessee, which is not sustainable.
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FEMA

• Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) (Amendment) Regulations, 2019 - Exemption from seeking approval in certain cases.
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Service Tax

• Penalty u/s 76 and 78 of FA - continuous default in paying service tax - statute has provided for cases/situations where there is a possibility of payment of Service Tax. Moreover, there is a penalty under Section 76 for delayed payment. Therefore, invoking of Section 78 for delayed payment in itself is not acceptable.
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• Refund of unutilized CENVAT Credit - Export of services or not - technical testing and analysis services - the services rendered by the appellant are in the nature of export service and hence eligible to cash refund of accumulated CENVAT Credit.
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• Time Limitation - demand of Service tax - It is on record that the department has not replied to the clarification sought by the appellants - extended period cannot be invoked, more so, as the appellants were regularly filing ST-3 returns
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• Interest on the inadmissible CENVAT credit - credit on capital goods - when full credit was availed instead of 50% of the credit, no interest was required to be paid where the credit taken inadvertently was not utilized.
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• Classification of activity - process of retreading - Since the issue relates to interpretation and there were divergent views during the relevant period, penalties set aside by invoking section 80.
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• The demand is on reverse charge basis in terms of Section 66A of the Finance Act and the appellant will be entitled to take the credit of entire service tax and the entire exercise is revenue neutral - extended period of limitation is not invocable - No penalty.
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Central Excise

• Rejection of Settlement Application - rejection on the ground that petitioner not making full disclosure - the requirement that the settlement application shall contain a full and true disclosure continues to remain in the statue - application was rightly rejected.
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• CENVAT Credit - input services - commission paid to their agents - the Explanation inserted in Rule 2(l) of Rules, 2004 should be declaratory in nature and effective retrospectively.
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VAT

• Attachment of Bank Accounts including cash credit account - when no amount lying in the cash credit account belongs to the petitioner, the question of attaching such account under section 45(7) of the Gujarat Value Added Tax Act, 2003 does not appear to be justified.
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Case Laws:

• GST

• 2019 (1) TMI 1092
  Transmission or distribution for electricity - exemption from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017 - period of the negative list regime - scenario post GST Regime - validity of clarification issued in para 4 (1) of the Circular No.34/8/2018-GST dated 1.3.2018 - includibility of charges such an application fee, meter rent, testing fee, etc collected by the Petitioners - composite supply - Section 43 (2) of the Electricity Act - It is the case of the petitioners that service by way of transmission or distribution of electricity continued to be kept out of the tax net even post 1.7.2012, and, the petitioners, therefore, neither collected nor paid any tax under the Finance Act on charges collected in connection with transmission of electricity even post 1.7.2012. Whether services relating to transmission and distribution of electricity fall within the ambit of clause (k) of section 66D of the Finance Act and, are therefore, exempt? - Held that:- It may be noted that prior to the coming into force of the negative list regime, goods and services were exempted by virtue of notifications issued in exercise of powers under sub-section (1) of section 93 of the Finance Act. By virtue of Notification No. 11/2010 dated 27.2.2010, the Central Government exempted transmission of electricity from the whole of service tax leviable thereon under section 66 of the Finance Act; and by virtue of Notification No.32/2010-Service Tax dated 22.6.2010, distribution of electricity came to be exempted from the whole of service tax leviable thereon under section 66 of the Finance Act. Thus, what was exempt under those provisions was transmission and distribution of electricity, despite which, during the pre-negative list regime, the respondents have considered services related to transmission and distribution of electricity as exempted from service tax by virtue of those notifications - Insofar as electricity meters are concerned, vide circular No.131/13/2010-ST dated 7.12.2010, it was clarified that supply of electricity meters for hire to consumers being an essential activity, having direct and close nexus with transmission and distribution of electricity, the same is covered by the exemption for transmission and distribution of electricity extended under relevant notifications. From the very manner in which the respondents have treated the services related to transmission and distribution of electricity during the pre-negative list regime, such services would stand covered by the exemption granted to transmission and distribution of electricity by virtue of inclusion of such services in the list of negative services under section 66D (k) of the Finance Act as well as by virtue of exemption notification issued under the CGST Act. Scope of bundled service - It is evident that a licensee, on an application by the owner or occupier of any premises, is required to supply electricity to such premises. For the purpose of supplying electricity, it is the duty of the distribution licensee to provide electric plant or electric line for giving electric supply to the premises of the consumer. In case the distribution licensee fails to supply the electricity, it is liable to penalty under sub-section (3) of section 43. Thus, a statutory duty has been cast upon the licensee to provide electric plant or electric line for giving electric supply to the premises of the applicant. Any line which is used for carrying electricity for any purpose as well as any apparatus connected to any such line for the purpose of carrying electricity is mandatorily required to be provided to the consumer by the licensee. Moreover, any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of electricity, except for electric meter and any electrical equipment, apparatus or appliance under the control of a consumer fall within the ambit of electrical plant as defined under section 2(22) of the Electricity Act. Sub-section (2) of section 43 of the Electricity Act casts a duty upon the licensee to provide if required electric plant or electric line for giving electric supply to the premises - all the services related to transmission and distribution of electricity are naturally bundled in the ordinary course of business of the petitioner and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character. A perusal of the GERC Regulations indicates that the services which are sought to be taxed now are the services, which the petitioner is required to mandatorily provide at the rate prescribed by GERC, a statutory authority constituted under the provisions of the Electricity Act. In the opinion of this court, all these services are essential activities which have a direct and close nexus with transmission and distribution of electricity. As the phase relating to the negative list regime is concerned, the services in question would fall within the ambit of bundled services as contemplated under subsection (3) of section 66F of the Finance Act, and would have to be treated in the same manner as the service which gives the bundle its essential character, namely, transmission and distribution of electricity and, would therefore, be exempt from payment of service tax - the principal supply of transmission and distribution of electricity is naturally bundled and supplied in conjunction with the related/ancillary services in the ordinary course of business, accordingly, in view of the provisions of clause (a) of section 8 of the CGST Act, the tax liability of such composite supply is required to be determined by treating the same as a supply of the principal supply namely, transmission and distribution of electricity. Applicability of clause (a) of section 8 of the CGST Act - principal supply is exempt from levy of service tax - Held that:- There is nothing in section 8 of the Act to read any such construction. What the section says is that the tax liability of a composite or a mixed supply shall be determined in the manner provided thereunder. In a given case, the tax liability may be nil, but that would not take such service out of the purview of section 8 of the Act, which would be attracted if the supply is either composite or mixed in nature, notwithstanding that the end result may be nil tax liability. The related supplies cannot be supplied separately nor are the principal supply and related supplies independent of each other. The related supplies are dependent on the principal supply of transmission and distribution of electricity and vice versa, neither service can be provided independent of the other. The transmission and distribution of electricity cannot be done without the help of electric line, electric plant and electric meter, and nor can the related services be used for any purpose other than for transmission and distribution of electricity. The principal supply and the related/ancillary services go hand in hand and one cannot be provided independent of the other. Thus, the services provided by the petitioner are in the nature of composite supply and therefore, in view of the provisions of clause (a) of section 8 of the CGST Act, the tax liability thereof has to be determined by treating such composite same as a supply of the principal supply of transmission and distribution of electricity. The impugned summons dated 28.3.2018 is hereby set aside to the extent the petitioners are called upon to produce the documents listed at serial No.5 of the annexure thereto, except clause - (vi); income from shifting of HT lines received from MEGA - the respondents shall drop the proceedings under the Finance Act, 1994 as well as under the CGST/SGST Acts sought to be initiated by virtue of the impugned summons to the extent the same is based upon item No.4 (1) of the impugned circular dated 1st March, 2018.

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• 2019 (1) TMI 1091
  Classification of services - services provided by the applicant in the nature of Research on the matter related to functioning of the holding of company - services provided by the applicant in the nature of Information on Market in the territory - service supplied by the Applicant under the Marketing Services Agreement dated 1 December 2012 - export of services - supply of “Support services” or intermediary services - future transaction - naturally bundled services - Export of services or not - Section 2(6) of the Integrated Goods and Services Tax Act 2017 - Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of “Support services” falling under HSN code 9985 or “Intermediary service” classifiable under HSN code 9961/9962? Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of “Support services” falling under HSN code 9985 “Intermediary service” classifiable under HSN code 9961 /9962? - Held that:- The relationship between the parties is that of independent contractors meaning that the agreement does not intend to create relationship of principal and agent. The applicant shall not represent itself to be agent of party A and vice-versa. Further applicant have no authority to conclude or negotiate any contracts or secure any orders or maintain any stock of goods on behalf of Party A in this case. On the contrary applicant would provide service on own account to party A to improve functioning of holding company and further augment its business vis a vis sale of all products manufactured and or sold or to be manufactured and or sold in India territory. Thus we find that applicant is not a person who arranges or facilitate supply of services between two or more persons - Thus applying the test mentioned in the Education Guide to the facts of the case we can safely conclude that the proposed service would not fall to be classified as ‘intermediary service’. Under the GST Act, a composite supply would mean a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply - In respect of supply which consist of more than two taxable supplies and to fall within the ambit of composite supply, it will be necessary for us to determine whether a particular supply is naturally bundled in the ordinary course of business and what constitutes principal supply. Services, naturally bundled or not? - Held that:- The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business - From the nature of services it is evident that these services are not interdependent but could be provided as standalone services. In as much as we can say that applicant proposes to provide two distinct category of supplies. And as such services provided by this agreement can not constitute ‘composite supply’ as defined under the GST Act. However, we observe that services mentioned at (i) (ii), (iii), (iv) of category B above constitute composite supply among them as these services are clearly independent where the market survey gives bouquet of services its essential character. Whether the services provided under the Service Agreement Merit classification as support services falling under HSN code 9985? - Held that:- The services provided by the applicant in the nature of Research on the matter related to functioning of the holding of company such as - corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon would fall under service code tariff 998599 as other support services nowhere elsewhere classified. Whether the service supplied by the Applicant under the Marketing Services Agreement dated 1 December 2012 constitute a supply of “Support services” falling under HSN code 9985 or “Intermediary service” classifiable under HSN code 9961 / 9962? - Held that:- The concept of intermediary under the GST Act is substantially identical to the concept of intermediary under the erst while service tax regime. This concept has been explained in the Education Guide issued by CBEC in the year 2012 - We find from the scrutiny of Marketing Services Agreement that the relationship between the parties is that of independent contractors meaning that the agreement does not intend to create relationship of principal and agent. The applicant in no way carries out activities such as conclusion of contracts, acceptance of sales orders, invoicing, determination of sales prices, rebate, discounts, resolution of customers complaints, or settlement of disputes with customers - thus,the proposed service would not fall to be classified as ‘intermediary service’. Whether the services supplied by the applicant constitute supply of ‘support services’? - Held that:- Applying the test as per Education Guide to the facts of the present case, we find that bouquet of services proposed to be provided would constitute as a package for single consideration. Further we find from nature of services that applicant’s role in respect of adoption and implementation of AM’s advertising policy, conducting sales promotion through exhibition trade, liaising with customer etc. is in the nature of assistance to AM in conducting said activities and not actual provision of services on his own account - the services the applicant proposes to provide would fall under Group 99837 as Market Research Services. Whether the services provided by the Applicant is an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? - Held that:- The supplier of service i.e. applicant is located in India, the recipient of service i.e. AM is located outside India -Japan; payment is received in convertible foreign exchange, the supplier of service and the recipient of service are not merely establishment of a distinct person and applicant not being an intermediary and services are not specified in sub-section (3) to (13) of section 13, the place of supply of service would be the location of the recipient of services i.e. AM Japan, which is outside India. As the applicant satisfies all the ingredients of ‘export of services’ the service provided by the ‘Marketing Services Agreement’ would qualify as an export of taxable service. Ruling:- The services provided by the applicant in the nature of Research on the matter related to functioning of the holding of company such as - corporate accounting, corporate, finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon would fall under service code tariff 99859 as other support services nowhere elsewhere classified. The services provided by the applicant in the nature of Information on Market in the territory would fall under service code tariff 99837 with service description market research services. The services supplied by the applicant under the Marketing Services Agreement would fall under Group 99837 as Market Research Services. The service provided by the ‘Marketing Services Agreement’ would qualify as an export of taxable service.

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• 2019 (1) TMI 1080
  Unable to upload FORM GST TRAN-1 within the stipulated time - Input tax credit - migration to GST regime - Held that:- There is a circular issued by the Government of India for “setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal.” - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off.

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• 2019 (1) TMI 1079
  Acceptance of manual filing of revised FORM GST TRAN-I and the resultant FORM GST TRAN-2 - error in electronic filing due to technical reasons - Held that:- The fourth respondent is directed to accept FORM GST TRAN-I and FORM GST TRAN-2 from the petitioner manually. The petitioner shall submit FORM GST TRAN-I and FORM GST TRAN-2 within one week from the date of receipt of a copy of this judgment. If the petitioner submits FORM GST TRAN-I and FORM GST TRAN-2 within the time as mentioned, the fourth respondent shall accept and transmit it into the electronic credit ledger of the petitioner within a further period of one week - petition disposed off.

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• 2019 (1) TMI 1078
  Cancellation of GSTIN registration - earlier this Court had directed the Revenue to explore the possibility of opening the GST portal and reinstating the GSTIN - Held that:- Today, it is informed that the portal was opened and the petitioner’s GSTIN was reinstated. Learned counsel has produced a copy of the intimation and the relevant returns filed by the petitioner. The intimation is hereby taken on the record - In view of the statement made, the writ petition is rendered infructuous - petition dismissed.

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• Income Tax

• 2019 (1) TMI 1090
  Liability to pay interest u/s 234B(2A) - retrospective legislation - whether the Settlement Commission could waive mandatory interest under Section 234 B or under similar provisions, namely Section 234A and Section 234C of the Act? - primary contention of the petitioner is that sub-section (2A) to Section 234 B introduced by the Finance Act, 2015 is not retrospective and would not be applicable as the petitioner had filed the application for settlement before sub-section (2A) to Section 234B was enacted - Held that:- Referring to the sub-section (2A) to Section 234B and examine whether same states that it would be applicable to pending proceedings Clause (a) of the said Sub-Section states that where an application under Sub-Section 245C for any assessment year has been made, the assessee shall be liable to pay simple interest at the rate specified for every month or part of the month comprised in the period commencing on 1st day of April of the assessment year and ending with the date of making such application. This refers to the application that has been made. It would apply to all applications that have been made. Clause (b) states that whereas as a result of order of the Settlement Commission in Sub-Section (4) to Section 245D the amount of total income disclosed in the application under Sub-Section (1) to Section 245C is increased, the assessee would be liable to pay simple interest for every month or part of the month comprised in the period commencing from 1st day of April of such assessment year and ending with the date of the order on the amount by which the tax on the total income determined on the basis of such order exceeds the tax on the total income disclosed in the application filed under Sub-section (1) to Section 245C of the Act. The provision clearly uses the present tense i.e. where application under Sub-Section (1) to Section 245C of the assessment year has been made. Clause (a) is therefore clearly intended to cases where application was pending and orders had not been passed when sub-section (2A) to Section 234B was enacted. Clause (b) refers to the date of order i.e. as a result of Sub-Section (4) to Section 245D of the Act, which should be after insertion of sub-section (2A) to Section 234B of the Act. As a sequitur and consequence it would follow that the amendment was intended to apply to all pending proceedings in which orders under Section 245 D(4) are passed after sub-section (2A) was introduced and made part of the Statute. The intendment of the legislature is therefore, clear and it would apply to pending proceedings. Therefore the second principle as per the above dictum is applicable. Accordingly, we hold that sub-section (2A) to Section 234B would be applicable to all proceedings in which orders are pending and /or in which orders under Section 245 D (4) are passed on or after 1st June, 2015. WP dismissed.

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• 2019 (1) TMI 1089
  Addition u/s 68 - unexplained money receipt in the form of share capital/share premium - addition was deleted by the CIT (Appeals) on the ground that the assessee had been able to establish identity, creditworthiness of the shareholders and genuineness of the transactions - Held that:- We have no hesitation in holding that the transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by the Tribunal is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. - Decided in favour of revenue

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• 2019 (1) TMI 1088
  Disallowance of interest expenditure on interest bearing loans, on account of diversion and advances and interest free loans to sister companies - Held that:- As alleged that the respondent-assessee had not furnished copies of alleged agreements with M/s Gaursons India Limited and M/s U.P. Township Private Limited. The Tribunal in the impugned order has referred to different amounts paid with reference to other advances and observed that all the above advances even if it is presumed that they are not given by the assessee for the non-business purposes they do not exceed the funds available with the assessee without interest. Keeping in view the assertions made by the Revenue on the findings recorded by the Tribunal, we feel that the appeal should not be dismissed in limine at the admission stage itself but should be heard in detail. Therefore, without expressing any opinion, we are issuing notice in this appeal returnable on 14th March,2019.

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• 2019 (1) TMI 1087
  Exemption u/s 10A - computation/ claim for deduction made in accordance with Section 80A(5) - multiple claims of deduction - filling of returns within limitation period - Held that:- Sub-section 5 to Section 80A states that if assessee has failed to make its claim on return under 10AA or 10B or any other provisions of Chapter VIA, no deduction shall be allowed to him thereunder. This bars and prohibits the assessee from claiming the deduction under Sections 10A and 10B and Chapter VIA if no such claim was made in the return of income. It is also mandatory that the return of income for claiming such deduction should be filed within the time stipulated under Section 139 (1) of the Act, as was held in the case of Nath Brothers Exim International [2017 (4) TMI 1036 - DELHI HIGH COURT]. The amendment made cannot be faulted and quashed on the ground that it was discriminatory, arbitrary, unreasonable and violative of Article 14, observing that it was within the legislative domain to prescribe the limitation period and also stipulate that the assessee to claim deduction must file returns during the limitation period, so as to enable the Department to take up these cases for scrutiny assessment. Plea of arbitrariness was rejected. The decision and ratio is distinguishable as the assessee had claimed deduction under Section 10A of the Act in the return of income filed within the limitation period. It was, therefore, not a new claim. Question of revision of deduction was not the issue and question raised and answered in Nath Brothers Exim International [2017 (4) TMI 1036 - DELHI HIGH COURT]. The objective behind the amendment was to defeat multiple claims of deduction and ensure better compliance. Certainly, the amended provisions ensure better compliance of the statutory provisions. Reference to the expression ‘multiple claims of deduction’ would be with reference to the stipulation that deduction should be claimed under a particular provision and it cannot be shifted and treated as deduction claimed under the other provision. Language of Sub-section 5 to Section 80 A does not state that the deduction once claimed under a particular section cannot be corrected and modified before the Assessing Officer. Indeed, AO can examine the claim for deduction and can make adjustment/ disallowance. We would not read in the amended provision, a stipulation barring and restricting the assessee from revising the computation/ claim for deduction made in accordance with Section 80A(5) of the Act. We answer the substantial question of law against the appellant-revenue and in favour of the assessee.

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• 2019 (1) TMI 1086
  Disallowance u/s 40(a)(ia) - failure to deposit tax deducted at source on or before due date of filing of the income tax return - scope of amendment to second proviso to Section 40(a)(ia) - retrospectivity - Held that:- The assessee had filed documents in evidence on which remand report was obtained to show that M/s Arch Infrastructure Projects Nirman Private Limited in their return of income filed under Section 139 for the Assessment Year 2011-12 had included payment/receipts of ₹ 17,00,20,000/- in their total income and had paid taxes thereon. The said position was affirmed and accepted after reluctance by the Assessing Officer before the Commissioner of Income Tax (Appeals). Last date for filing of return for the Assessment Year 2011-12 was 30th September, 2011, which was Friday and a bank holiday. Banks were also closed on 1st and 2nd October being Saturday and Sunday. 2nd October was also a national holiday. On 3rd October, 2010 respondent-assessee had deposited tax at source accordingly. Assessee had also paid interest for the delay in deposit of TDS of two days. This is also not denied and disputed. In these circumstances, the Revenue should have exercised its discretion and accepted the order of the Tribunal given the peculiar facts of the present case for every infraction of provision, when there is substantive compliance, need not be made a subject matter of challenge before the High Court. At best the disallowance of expenditure under Section 40(1)(a) in this year would have been allowed in the next assessment year. In view of the aforesaid position, as the issue is already covered against the Revenue by decision of this Court in Ansal Landmark Township (P) Limited [2015 (9) TMI 79 - DELHI HIGH COURT], no substantial question of law arises for consideration.

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• 2019 (1) TMI 1085
  Stay petition - stay on recoveries on the condition of depositing ₹ 18 Crores - interim injunction against the recovery of the unpaid tax and interests - Held that:- Tribunal had passed an order on 10th November, 2017, protecting the Petitioner-Trust against the recoveries of unpaid tax and interest on the condition that, the Petitioner-Trust deposits with the Department, a total sum of ₹ 18 Crores in three equal installments. Since Petitioner-Trust could neither have these conditions altered, nor could the Petitioner-Trust fulfill the conditions, the Tribunal later on passed the impugned order on 18th December, 2018, rejecting the stay applications of the Petitioner-Trust. This would give rise to recovery of entire tax of around ₹ 142 Crores with interest. It would be open to and in fact, department has initiated coercive recovery. Whatever be the interim events, we cannot lose sight of the fact that the Tribunal in its order dated 10th November, 2017 had found prima facie case in favour of the Petitioner which persuaded the Tribunal to grant stay against and further recoveries on the condition of depositing ₹ 18 Crores. Not protecting the Petitioner-Trust at this stage, may have severe adverse effect on running its several educational and medical institutions, rendering the staff jobless and students without college. Therefore, put the Petitioner-Trust back to the same position as on 10th November, 2017. The Tribunal had granted conditional stay to the Petitioner-Trust, which order, in any case, the Department had not challenged. However, we cannot lose sight of passage of time in between. We, therefore, insist that the Petitioner-Trust deposits with the Department a total sum of ₹ 20 Crores, upon which, there shall be stay against further recoveries. Petitioner-Trust would also cooperate for the early disposal of the Appeals before the Tribunal. Petition is disposed of with the following directions: (i) Petitioner-Trust shall deposit in its bank account such amount as may be necessary so as to make the total balance available between all accounts of the Petitioner-Trust to a minimum of ₹ 20 Crores. This shall be done within six weeks from today. It is clarified that this requirement of raising a total of ₹ 20 Crores would include a sum of ₹ 1,11,37,877/payable by the Government of India to the Petitioner-Trust which also Income Tax Department has attached; (ii) As soon as this is done, the Petitioner shall intimate it to the Department in writing.

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• 2019 (1) TMI 1084
  Deduction u/s. 80IB(10) denied - assessee not having obtained completion certificate within four years from the end of the financial year in which the project was approved by the local authority - Held that:- This issue is now no longer res integra as it stands concluded against the Revenue by the decision of this Court in CIT v/s. Hindustan SamuhAwas Ltd.[2015 (10) TMI 2306 - BOMBAY HIGH COURT] wherein as held that whether the project is completed within the time framed provided under Section 80IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10) of the Act. In the present case on facts, it is found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, the Respondent should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate. In passing, we may also point out that the approval of plans and commencement certificate were received by the Respondent in respect of the project before the amendment to Section 80B of the Act on 1st April, 2005. In such cases, this Court has taken a view that the time limit provided by the amendment to complete the construction by obtaining completion certificate will not apply - Decided against revenue

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• 2019 (1) TMI 1083
  Exemption u/s 11 - addition made on the pretext that Form No.10 was filed belatedly - Held that:- The judgment rendered in case of Nagpur Hotel Owners Association [2000 (12) TMI 99 - SUPREME COURT] squarely applies to the facts of present case, wherein Hon’ble the Supreme Court has held that Form No.10 should be submitted before framing of the assessment order. That apart, as long as the entitlement of the assessee regarding setting apart of the accumulated profit is not doubted, no addition can be made on the pretext that Form No.10 was filed belatedly. This view of ours is fully fortified by a Division Bench of this Court rendered in case of ANJUMAN MOINIA FAKHARIA [1993 (10) TMI 51 - RAJASTHAN HIGH COURT] the provisions of Rule 17 which are framed under Section 11(2) before April 1, 1971, did not prescribe any time-limit for filing Form No.10 and without there being any amendment in the provisions of the Act, the rule was substituted with effect from April 1, 1971, prescribing the time-limit from the assessment year 1971- 72. Prior to the assessment year 1971-72, the form could have been submitted upto the stage of assessment.

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• 2019 (1) TMI 1082
  Proceedings u/s 153A - Unexplained credit addition u/s 68 - proof on incriminating material find to make the additions - Held that:- Assessment u/s 153A was made by assessing officer after search and no any incriminating documents/papers seized during the search operation, therefore, without incriminating material the addition should not be made. Therefore, keeping in view the ratio decided in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] since there is no incriminating material unearthed during search in respect of the concluded assessments, no addition/disallowance could be made - Decided in favour of assessee.

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• 2019 (1) TMI 1081
  Disallowance on account of Director’s commission/bonus - addition under provisions of Section 36(1)(ii) - Held that:- According to us, the section allowed deduction if the expenditure is on account of bonus or commission paid to an employee and for services rendered. Such sum would not even otherwise payable as profit or dividend. Assessee being newly incorporated, had recruited employees from other organisations based on educational qualifications and based on experience of such employees, which we have already narrated above. It is a fact that assessee has agreed to pay bonus only to its employees for the year under consideration to their continued employment and Shri Suresh Prabhala rendered services for the assessee and assessee in lieu of that has paid bonus in the month of January, 2009. Shri Suresh Prabhala was not a shareholder when the bonus/commission was paid to him and once he is not a shareholder and commission/bonus paid for the services rendered, the provisions of Section 36(1)(ii) mandates that the bonus is to be allowed. Admittedly, this bonus is not out of the earlier years’ accumulated profits. Hence, we confirm the order of CIT(A) and this issue of Revenue is dismissed.

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• 2019 (1) TMI 1077
  Penalty u/s 271D - failure to comply with Section 269SS - deposits / loans received through journal entries - reasonable cause u/s 273B for entering into such transactions through journal entries - HC clarified / stated the position as always existing in law, the receiving of deposits / loans through journal entries would certainly be hit by Section 269SS - Held that:- No good ground to entertain this petition. The Special Leave Petition is dismissed.

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• 2019 (1) TMI 1076
  Claim for deduction u/s 54F on construction of residential house - exemption u/s 54F was claimed by the assessee for construction of house property and the purchase of land was not coming under the purview of “construction of house property” - assessee has filed additional evidence in the form of completion certificate for the residential house property constructed by the assessee issued by the concerned Gram Panchayat on 31.03.2014 to support and substantiate the claim - Held that:- Since the said additional evidence is a relevant evidence to adjudicate upon the issue involved in the case of the assessee related to its claim for deduction under section 54F in respect of the cost of construction of the residential property and even the D.R. has not raised any objection for admission of the same, the additional evidence filed by the assessee is admitted. As rightly contended by the D.R., the AO is required to give an opportunity to verify the said additional evidence, which is filed by the assessee for the first time before the Tribunal. We accordingly restore this issue to the file of the Assessing Officer for deciding the claim of the assessee for deduction under section 54F in respect of cost of construction of residential house property afresh in the light of the additional evidence filed by the assessee. Additional ground claiming that for computing the deduction under section 54F, the actual net consideration received in respect of the original asset should be taken into consideration and not the deemed consideration as adopted by invoking the provisions of section 50C. We have admitted this additional ground raised by the assessee keeping in view the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Limited [1996 (12) TMI 7 - SUPREME COURT]. The Assessing Officer is accordingly directed to consider the claim of the assessee while re-computing the deduction allowed to the assessee under section 54F. Reopening of assessment - scope of powers of first appellate authority issuing notice - Held that:- In the case of R.S. Davey –vs.- CIT [1981 (8) TMI 31 - CALCUTTA HIGH COURT], a similar issue relating to scope of powers of first appellate authority had arisen for the consideration and it was held that the ld. CIT(Appeals) was not competent to give to the Assessing Officer the direction in respect of an assessment year which was not in appeal before him. Respectfully following the said decision of the Hon’ble jurisdictional High Court, we cancel the direction given by the ld. CIT(Appeals) to the Assessing Officer in respect of the assessment year 2015-16, which was not in appeal before him and allow Ground of the assessee’s appeal.

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• 2019 (1) TMI 1075
  Condonation of delay - eligible reasons for delay - Held that:- It is a matter of record that on the identical issue raised by the appellant in respect of earlier assessment, the appeal is pending before the High Court. In these circumstances, the High Court should not have taken such a technical view of dismissing the appeal in the instant case on the ground of delay, when it has to decide the question of law between the parties in any case in respect of earlier assessment year. For this reason we set aside the order of the High Court; condone the delay for filing the appeal and direct to decide the appeal on merits.

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• 2019 (1) TMI 1074
  Cancellation of the auction and the sale certificate for land - Held that:- Land was purchased by the assessee in an auction held by Debt Recovery Tribunal which was subsequently made the subject matter of challenge before the High Court. Pursuant to the orders passed by the High Court, the entire sum deposited by the respondent was refunded along with interest accrued thereon. ₹ 3,19,07,676/- was paid by the bank as interest. We feel that the matter should be examined in depth and detail. Accordingly, we are inclined to issue notice in this appeal, returnable on 26th March, 2019.

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• 2019 (1) TMI 1073
  Reopening of assessment - unexplained investments - Held that:- No information was received by the Assessing Officer from the Investigation Wing that the assessee had received accommodation entry (see paragraph 25(i) of the impugned order). The aforesaid rationale is incorrect, for whether or not any accommodation entry was received has to be inferred and concluded from the facts by the Assessing Officer, and not by a third person. It is the subjective opinion formed by the Assessing Officer that has to be tested on the principle of an honest and reasonable person. In this case, the stockbrokers had elucidated on the sham and bogus nature of the share transaction i.e., investment and sale of worthless shares which was done through unknown persons who were the respondent-assessee’s representatives, and other facts accepted and admitted in the statements which were recorded by the Investigation Wing. Similarly, paragraph 25(ii) of the impugned order proceeds on wrong premise that when the block assessment order in the case of Ms. Mohinder Kaur was quashed on the technical ground that addition of ₹ 2.5 crores could not have been made in the block assessment proceedings, re-opening under Section 147 read with Section 148 would not be justified, for the entire money of Taranjit Singh was routed through the respondent-assessee or the Revenue could not take a ‘somersault’ for the purpose of reopening assessment or make addition on substantive basis later on. This reasoning is wrong and fallacious being contrary to law, for appellate orders in the case of Ms. Mohinder Kaur had not been passed when the ‘reason to believe’ in the case of respondent-assessee were recorded. The ‘reason to believe’ recorded cannot be set aside on the basis of the appellate order in the case respondent-assessee making substantive addition instead of protective additions made in the assessment order. Question of ‘somersault’ does not arise when protective addition made into substantive addition. - Decided against assessee Addition u/s 68 - addition on protective basis on the ground that three brokers have given accommodation entries to the appellant Company - Held that:- The assessee had not raised a specific ground that they were not furnished statements on oath or were denied opportunity to cross-examine the brokers. The Assessment Order specifically refers to the failure of the stock brokers to produce relevant documents/papers. Assessing Officer had not only relied upon the statements recorded by Deputy Director (Inv.) but had also himself recorded the statement of Shagun Garg on 11th March, 2005. The Commissioner of Income Tax (Appeals) had similarly recorded the statement of Hari Krishan Punni on 27th February, 2008 during the pendency of the appeal. Relevant facts noticed in the assessment order, statement an oath etc. have been passed over and overlooked - answer the substantial question of law No. (2) in favour of the appellant-Revenue and against the assessee

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• 2019 (1) TMI 1072
  Reopening of assessment - BAL had transferred telecom infrastructure assets to its subsidiary and the present petitioner-BIL on 31st January, 2008 for nil consideration under a Scheme of Arrangement (‘SOA’) approved by the Delhi High Court - scheme of demerger conceived - validity of Reasons to believe - Held that:- BIL had made full and true disclosure of material facts i.e. all primary facts which are mentioned and stated in the ‘reasons to believe’ . Nothing was concealed, withheld and nothing was left to be factually discovered in the form of ‘material’ mentioned in detail in accounts and other evidence, that was not disclosed/stated but could have been discovered by due diligence. In fact as noted above, reading of the ‘reasons to believe’ i.e. evidence and material in form of facts and figures were duly stated and mentioned in the affidavit sworn by Mr. Raghuveer Singh Dagur on 12th February, 2010, opposing the second scheme of demerger and transfer of infrastructure assets in 12 circles by BIL to M/s Bharti Infratel Ventures Ltd. and language, facts and figures in the ‘reasons to believe’ are similar, if not identical. Writ petition has to be allowed as the jurisdictional pre-conditions in the form of proviso to Section 147 is not satisfied in the facts of the present case. Explanation 1 would not apply as all primary facts were disclosed, stated and were known and in knowledge of the Assessing Officer. Further, this would be a case of ‘ change of opinion’ as the assessee had disclosed and had brought on record all facts relating to transfer of passive infrastructure, its book value, fair market value as was mentioned in the SOA as also that the transferred passive assets to become property of M/s. Indus Infrastructure Ltd. including the dates of transfer and the factum that one-step subsidiary Bharti Infratel Ventures Ltd. was created for the said purpose. These facts were within the knowledge of the Assessing Officer when he had passed the original assessment order for the Assessment Year 2008-09 on 20th December, 2010. Notice for reopning quashed - Decided in favour of assessee.

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• 2019 (1) TMI 1071
  TDS u/s 194C - tds on works contract - whether transaction between the assessee and the manufacturer is a contract for sale of goods and is not in the nature of works contract? - Held that:- The common impugned order of the Tribunal allowed the assessee's two appeals by recording a finding of fact that the assessee had purchased goods on principal to principal basis and had not entered into any works contract. On the above facts, it followed the decision of this Court in the case of Commissioner of Income-tax Vs. Glenmark Pharmaceuticals Ltd [2010 (3) TMI 289 - BOMBAY HIGH COURT] In view of the fact that the finding of fact by the Tribunal is not shown to be perverse, the application of the decision of this Court in Glenmark Pharmaceuticals Ltd (supra) cannot be found fault with. No substantial question of law

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• 2019 (1) TMI 1070
  Direction to the respondent to grant six months time for furnishing the documents relating to assessment year - Held that:- The reasons stated in the letter dated 06.12.2018, the petitioner is directed to furnish the reply along with necessary documents in respect of the assessment year 2016-2017 before the respondent/AO on or before 15.02.2019. If no reply along with necessary documents are filed within the time stipulated herein, it is open to the AO to proceed with the assessment in accordance with law. It is made clear that no further time will be granted to the petitioner in any event.

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• 2019 (1) TMI 1069
  Reopening of assessment - Held that:- Reasons recorded, the Assessing Officer could not have formed the belief that the income chargeable to take has escaped assessment. It is further submitted that the Assessing Officer seeks to reopen the assessment on the basis of audited accounts and hence, the reopening is bad in law. Having regard to the submissions advanced by the learned advocate for the petitioner, issue Notice, returnable on 7th January 2019. Mrs. Mauna Bhatt, learned Senior Standing Counsel for the respondent waives service of notice. By way of ad-interim relief, the respondent may further proceed in pursuance to the impugned notice, however, not pass any final order without prior permission of the court.

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• 2019 (1) TMI 1068
  Character of income - accrual of income - Nature of interest received by the landowner-assessee under Section 28 of the 1894 Act - whether the interest which is received by the assessee-landowner partakes the character of income or not and, in such a situation is it taxable under the provisions of the Act - Held that:- The award of interest under Section 28 of the 1894 Act applies when the amount originally awarded has been paid or deposited and when the Court awards excess amount. In such cases interest on that excess alone is payable. Section 28 empowers the Court to award interest on the excess amount of compensation awarded by it over the amount awarded by the Collector. The compensation awarded by the Court includes the additional compensation awarded u/s 23(1A) and the solatium u/s 23(2) of the said Act. Section 28 is applicable only in respect of the excess amount, which is determined by the Court after a reference under Section 18 of the 1894 Act. Under Section 34 of the 1894 Act, the Collector awards interest on the compensation offered at the rate of 9% per annum for a period of one year from the date of taking possession and thereafter at the rate of 15% per annum from the date of expiry of one year on the amount of compensation or part thereof which remains unpaid or deposited before the date of such expiry. A plain reading of Sections 23(1A), 23(2) as also Section 28 of the 1894 Act clearly spells out that additional benefits are available on the market value of the acquired lands under Section 23(1A) and 23(2) whereas Section 28 is available in respect of the entire compensation. The cumulative effect of Section 145A(b) and Section 56(2) (viii) would be that any interest received on compensation or on enhanced compensation shall be taxable under the head 'income from other sources' in the year of receipt. However, by Section 27 of the 2009 Act, a new clause (iv) in Section 57 has been inserted w.e.f. 01.04.2010 which lays down that in the case of income of the nature referred to in Section 56(2)(viii), a deduction of a sum equal to 50% of such income would be allowable thereunder and no deduction would be allowed under any other clause of Section 57 No illegality or perversity could be pointed out by learned counsel for the assessee in the concurrent findings of fact recorded by the authorities below which may warrant interference by this Court. No question of law

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• 2019 (1) TMI 1067
  Estimation of income at 1% of the gross turnover - survey u/s 133A - Held that:- In the assessee’s case, there is no dispute that the turnover exceeds 10 crore. Though the department has made survey u/s 133A no evidence was brought on record to establish that the net profit is more than 0.4% or the assessee’s case is different from other cases and deriving more income than the other comparable cases. The department also did not find any concealed assets in assessee’s case. The AO did not give the basis for estimation of income at 1% of the gross turnover. AO also did not make any exercise to work out the net profit with the sale price and relevant expenses. The orders were passed by the ITO, Ward-2 Bhimavaram in the assessee’ case as well as other cases relied upon by the CIT(A). For the A.Y. 2013-14 in the case of Mr.Abdul Kalam Azad, the AO estimated the income at 0.4% after rejecting the books of accounts. Similarly in the case of Adabala Narsimha, the same AO estimated the income @0.4% clear of expenses. During the appeal hearing the department could not place any evidence before us to controvert the finding given by the Ld.CIT(A) or to substantiate the contention of the department that income estimated by the Ld.CIT(A) is less and assessee gets more income than the comparable cases decided by the AO. Therefore, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. The appeals of the revenue on these grounds are dismissed. Depreciation on crates - Held that:- Grounds of appeal before the CIT(A) in MHM Fish Packers, the assessee challenged the addition made by the AO for assessment of income separately on the fish crates without allowing the expenses relatable to earning the income on fish crates. The depreciation is an expenditure which required to be allowed while computing the income. Therefore, contention of the revenue that the CIT(A) has allowed the depreciation on crates without being agitated before him is incorrect. Therefore we dismiss the revenues appeal in ground with regard to depreciation. Estimation of income from the fish trading separately and the income from fish crates separately - Held that:- In this case, though the AO has taxed the entire receipt from fish crates as income and did not allow the expenditure relatable to earning of income. AR submitted before us that the assessee would be satisfied if the interest expenditure is also allowed. We are of the considered opinion that the depreciation on crates and the interest attributable to acquiring the fish crates required to be allowed in the interest of justice. We uphold the order of the Ld.CIT(A) with regard to the allowance of depreciation on fish crates and remit the issue of interest on crates back to the file of the AO with a direction to verify the issue with regard to the borrowed capital for acquiring the crates and allow the interest relatable to acquiring fish crates also. The AO should give an opportunity to the assessee before completing the assessment. Accordingly appeal of the revenue on this ground is dismissed and the cross appeal of the assessee on this issue is allowed.

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• 2019 (1) TMI 1066
  Eligible for exemption u/s. 11 or 10(23C) - profits on sale of tickets and advertisement space (BCCIT Reimbursements) - dominant and prime objective of the institution - utilization of accumulated funds / profit - Held that:- As considered the proviso to section 2(15) and held that if the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a ‘charitable purpose’. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established charitable purposes. Assessee-association only existed for the purpose to develop the game of the cricket in the State of Andhra Pradesh and therefore, the main character of the assessee is a charitable in nature. So far as conducting international matches on behalf of the BCCI is concerned, it is secondary or incidental to achieve the main object. Therefore, in our opinion, the dominant object of the assessee is to only develop the game of the cricket and not to carry any business activity directly or indirectly in the activities related trade, commerce, business. Therefore, assessee is entitled for claim of exemption under section 11 and section 10(23C)(iv) of the Act. No reason to interfere with the order passed by the CIT(A). - Decided against revenue. Accumulated fund utilized within the specific period basing on the statement of expenditure submitted by the society during appellate proceedings - additional evidence produced by the assessee society by way of statement of expenditure - Held that:- DR is not able to point out any mistake or error committed by the CIT(A) finding in respect of accumulation of funds. However, AR has pointed out from paper book at page Nos. 12 to 15 that in respect of accumulation of profits, a detailed submission was made before the Commissioner (Exemptions) by letter dated 04/08/2017, the Commissioner (Exemptions), Hyderabad has considered the same and gave a categorical finding that there is no violation in respect of accumulation of funds pertaining to Financial Year 2007-08 and 2008-09 for treating unutilized within the specified period of five years. AO is not correct in saying that the funds are not utilized within the period of five years. We find that the CIT(A) by considering the detailed explanation given by the assessee for accumulation of funds for the Financial Years 2007-08 & 2008-09 and utilization of the same and gave a categorical finding that the assessee has not violated in respect of accumulations made under section 11(2). Therefore, CIT(E) dated 28/08/2017 and also CIT(A) examining the accumulations and utilization of funds for the Financial Years 2007-08 & 2008-09 gave a categorical finding that there is no violation committed by the assessee, all funds are utilized in time as per law. We find no reason to interfere with the order passed by the CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.

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• 2019 (1) TMI 1065
  Disallowance of deduction u/s 48(i) - computation of capital gain - Whether the expenditure incurred of U.S. $ 13,27,609, is wholly and exclusively in relation to the transfer of shares of the Indian subsidiary, hence, allowable as deduction under section 48(i) - Held that:- There cannot be any room for doubt that the expenditures were in relation to the transfer of shares of the India Subsidiary termed as ‘Project Genesis’. As could be seen from the scope of work for which the services were rendered by the legal /professional firm, it is closely and intrinsically related to transfer of shares of the Indian Subsidiary. Therefore, the expenditure incurred is wholly and exclusively in connection with the transfer of shares of the Indian Subsidiary. Hence, qualifies for deduction u/s 48(i). Non–disclosure / non–mention in the name of the ultimate buyer of the shares in no way militates against the fact that the expenditure incurred by the assessee on account of legal and professional fees paid is in connection with transfer of shares. The decision relied upon by the learned Departmental Representative on the other hand, will not be applicable to the facts of the present case, since, it involves allowability of PMS fee which is not the issue in the present appeal. Thus, in view of the aforesaid, we hold that assessee’s claim of deduction of U.S. $ 13,27,609 is allowable under section 48(i). - Decided in favour of assessee.

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• 2019 (1) TMI 1064
  Addition u/s 43B - deduction for the employees’ contribution made to PF after the due date prescribed under the PF Act - Held that:- There is no distinction between employees’ and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees’ contribution to provident fund. The CIT(A) after considering the relevant details rightly deleted the additions made by the A.O. We do not see any reasons to interfere with the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and dismiss the appeal filed by the revenue - Decided in favour of assessee.

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• 2019 (1) TMI 1063
  Revision u/s 263 - Disallowance under section 80-IB, Interest on TDS and Addition under section 14A - Held that:- There is no escape from the position that what was not the subject matter of notice issued and the order passed under section 263 of the Act, cannot be made subject matter of assessment in pursuance to an order passed under section 263 of the Act. It cannot be disputed, as has also not been done, that the items of additions/disallowances now made by the Assessing Officer, i.e., disallowance of ₹ 26,24,573/- under section 80-IB of the Act; interest of ₹ 1,699/- on TDS and addition of ₹ 36,310/- under section 14A of the Act, were not the subject matter of either the notice issued, or the order passed under section 263 of the Act. In “CIT vs. D.N. Dosani” (2005 (10) TMI 35 - GUJARAT HIGH COURT), it has been held that where the assessee was called upon by the ld. Pr. CIT to tender an explanation qua two items mentioned in the show cause notice, Pr. CIT could not have treated any further item or part of the assessment order as being erroneous and prejudicial to the interests of the Revenue without giving the assessee an opportunity of being heard; and that, therefore, what the Commissioner himself could not have done, could not be permitted to be done by the Assessing Officer while giving effect to the order under section 263 - Tribunal was right in holding that in the fresh assessment order passed in pursuance of the consolidated order under section 263 of the Act, the Assessing Officer was entitled to consider only two items which had been considered by the Commissioner and was not entitled to consider any other item afresh for making addition. The orders passed by the ld. CIT(A) for both the years are, thus, reversed, except:- (i) the ld. CIT(A)’s action in directing the Assessing Officer, for assessment year 2010-11, to verify whether M/s Pool Services has disclosed the contract job work charges of ₹ 1,66,700/- in its profit & loss account and paid the income tax thereon, on the fulfillment of such verification, the addition would stand deleted; (ii) the action of the ld. CIT(A) in confirming the addition of ₹ 45,725/- made under section 14A of the Act, for assessment year 2011-12, as this issue does arise from the order issued under section 263 and was correctly made the subject matter of assessment pursuant to the revisional order.

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• 2019 (1) TMI 1062
  Addition on account of personal expense or repair and maintenance disallowance u/s. 14A - disallowance u/s. 36(1)(iii) - Disallowance of prior period Exp - assessee has not produced documents to substantiate its claim at the time of assessment proceedings - Held that:- CIT(A) has done good reasoned order which does not require any interference. CIT(A) has discussed the entire issues in detail after considering the detailed submissions made before him and relying on various case laws. No contrary material is brought on record on behalf of the Revenue to discard the conclusions arrived at in the impugned order. Therefore, finding no infirmity in the impugned order, the appeal of the Revenue is found devoid of merits and deserves to fail. - decided against revenue

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• 2019 (1) TMI 1061
  TPA - AMP expenses treated as international transaction by applying bright line test - Held that:- Since basis on which adjustment has been made being bright line test itself has been rejected by Hon’ble Delhi High Court in assessee’s own case for Assessment Year 2008-09, no further interference can be called for at this stage. Further reliance placed by Ld.Sr.DR on BEPS guidelines and action plan 8-10 cannot be applied as the same is yet to be implemented. No purpose will be served by keeping present appeal pending, as issues raised by revenue in assessee’s own case along with other cases, has not been listed before Hon’ble Supreme Court. We are therefore inclined to follow view taken by this Tribunal in assessee’s own case which has been upheld by Hon’ble High Court for Assessment Year 2008-09. We therefore, reject prayer advanced by Ld.Sr.DR for adjournment. Mismatch in 26 A-S - Held that:- Perusal of record it appears that differential amount reflected in form 26 A-S were not properly reconciled. As now assessee has all relevant information for the same, in the interest of natural Justice, we direct Ld. AO to tally database of revenue in light of details filed by assessee. Disallowance of expenses u/s 37 incurred by assessee on account of alleged AMP expenses - Held that:- As the issue relating to nature of AMP expenses being international transaction or not has been set aside to Ld.AO in preceding paragraphs, the allowability of such expenses claimed by assessee under section 37 of the Act also deserves to be set-aside. The outcome of this ground raised depends upon decision of Hon’ble Supreme Court in assessee’s own case. Disallowance of expenses of tour packages given to dealers - onus to substantiate its claim with actual figures for such package tools undertaken by employees/dealers as a part of incentives - Held that:- From the records we understand that no documents/evidences have been placed to establish the claim. We are therefore inclined to set aside this issue back to learn the AO/TPO for readjudication. Assessee shall file all requisite details in order to establish the claim. It shall give itemised details regarding the incentives that have been awarded to its employees or dealers as the case may be. Ld. AO/TPO shall then verify the same and if found in order shall allow the claim of assessee even though the expenses has been accounted for in subsequent financial year. - Ground raised by assessee stands allowed for statistical purposes. Claiming weighted deduction under section 35(2AB) in respect of expenses incurred by in-house research & development facility - Held that:- Assessing Officer has not got an opportunity to verify claim in light of documents relied upon by assessee before us. In the interest of natural Justice, we set aside this issue to Ld.AO for due verification of documents and to consider claim of assessee in light of decision delivered by Hon’ble Delhi High Court in case of Maruti Suzuki India Ltd [2017 (8) TMI 248 - DELHI HIGH COURT] - Additional ground of assessee stands allowed for statistical purposes.

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• 2019 (1) TMI 1060
  Stay petition - Deemed dividend addition u/s 2(22)(e) - amount of Reserve and surplus of M/s. Advantage overseas Pvt. Ltd in which the assessee company was holding more than 10% of voting power - Held that:- Stay application and are inclined to stay the demand for a period a period of 90 days from the date of the stay order or disposal of the appeal whichever event occurs earlier. The stay granted to the assessee will be in operation only if the assessee fulfills the above stated conditions. Registry is directed to fix the appeal out of turn for hearing on 21.3.2019 and the date of hearing to be communicated to the parties. Assessee is also directed to file necessary paper book, if any, at an early date and adjournment should not be seeked unless for any unavoidable circumstances. Stay application of the assessee is allowed subject to the terms and conditions stated hereinabove. Stay application of the assessee is allowed subject to the terms and conditions stated hereinabove.

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• 2019 (1) TMI 1059
  Condonation of delay in filing an appeal - levy of Late filing fees u/s 234E - intimations issued u/s 200A - scope of amendment o f Section 200A(1)(c) of the Act vide Finance Act, 2015, w.e.f. 01.06.2015 - default in furnishing the statement of TDS - Held that:- There the levy of late fees under section 234E has not been paid, the case should not be re-opened / appeals. There is nothing in the order of the Hon’ble High Court to imply that appeals cannot be filed on such intimations u/s 200A levying late fee under section 234E. All that the order of the Hon’ble High Court has said is that the cases in which the levy has been paid shall not be re-opened to process refunds. The assessee’s case does not fall under that category, as the assessee has not paid the levy of late fees u/s 234E and therefore the question of re-opening the case on hand in view of these 9 appeals to grant refund would not arise. In the light of the decision of the Hon’ble Apex Court in the case of MST Katiji and Others [1987 (2) TMI 61 - SUPREME COURT] and in the case of Fatheraj Singhvi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] we are of the considered opinion that this is a fit case for condonation of delay by the assessee in filing these 9 appeals before the CIT(A) and accordingly condone the said delay. We also deem it appropriate to remand the issue of levy of fee u/s 234E through intimation under section 200A which is in consideration before us to the file of the CIT(A) for examination and adjudication on merits and in accordance with law. - Appeals filed by the assessee for statistical purposes.

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• 2019 (1) TMI 1058
  Stay of demand - Penalty levied u/s 271AAB - Held that:- The assessee has already paid more than 41% of the demand and the stay was granted at the time of filing the appeal, however, due to release of the appeal, the stay granted by the Tribunal was expired, we find it proper to grant stay against the balance outstanding demand up to 28/2/2019. The appeal of the assessee is now fixed for hearing on 13/02/2019. The next date of hearing has been announced in the open court and has been noted by both the parties, therefore, no separate notice shall be issued in this regard. The parties are directed not to take any adjournment except in unavoidable circumstances. Stay petition allowed.

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• 2019 (1) TMI 1057
  Penalty u/s 271AAB (1)(a) - amount surrendered during the course of search - additional income duly declared in the return of income filed u/s 139(1) - Held that:- Levy of penalty under section 271AAB is not mandatory. Firstly, regarding stock of Kundan Meena, and diamond and other gemstones studded jewellery which has been surrendered during the course of search, we find that AO has merely gone by the surrender statement and has not examined the matter from the perspective of determining the cost of such stock and the quantification thereof after allowing deduction for Chapadi, wax, etc. which is a well established step as part of valuation methodology of such kind of jewellery and which has been followed at other locations except at Jaipur. No finding that there is any excess stock which has been physically found and which has not been found recorded in the books of accounts as on the date of search - difference in stock of jewellery and silver items as per books and as found at the time of search is on account of valuation of such stock at the market value instead of cost and such valuation difference and on account of non-deduction of Chapadi, wax, etc while weighing the Kundan Meena Jewellery and the same cannot be a basis to hold that it represent undisclosed income so defined in explanation to section 271AAB and the penalty levied thereon is liable to be set-aside. Surrender made on account of cash advances for land purchases in the statement recorded u/s 132(4) undisclosed investment by way of advance for purchase of land can be subject matter of addition in the quantum proceedings, as the same has been surrendered during the course of search in the statement recorded u/s 132(4) and offered in the return of income, however the same cannot be said to qualify as an undisclosed income in the context of section 271AAB read with the explanation thereto and penalty so levied thereon deserved to be set-aside. Surrender on account of other discrepancies, in absence of any such discrepancy so found by the Assessing officer either during the assessment or penalty proceedings, the said surrender may be the basis for assessment but can’t form the basis for levy of penalty in absence of a specific finding as to how the same qualify as an undisclosed income so defined u/s 271AAB of the Act. Hence, penalty levied thereon is liable to be set-aside. Regarding surrender of cash found from the residence of the partners and which has been admitted as belonging to the assessee firm in statement recorded u/s 132(4) and not found recorded in the books of accounts at the time of search, there cannot be any dispute that the same represents undisclosed income and liable for penalty u/s 271AAB which is hereby confirmed. The penalty U/s 271AAB is sustained to the extent of cash found during the course of search and penalty is hereby directed to be deleted on rest all items of surrender made during the course of search in absence of the same qualifying as undisclosed income as so defined under section 271AAB of the Act. Appeal filed by the assessee is partly allowed.

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• 2019 (1) TMI 1056
  Rejection of books of accounts - fall in GP rate - whether assessee made sales outside the books of accounts or inflated any expenditure? - Held that:- The explanation that the very nature of the manufacturing process made it difficult to have any reasonable and determinable correlation of individual output vis-à-vis the input appears to be plausible one. Consistent accounting policies were being followed by the assessee and similar records were being maintained in earlier years. AO has failed to adduce any cogent evidence to suggest any serious defect or discrepancy in the books of accounts or bring on record any material to establish that the assessee made any sales outside the books of accounts or inflated any expenditure. A mere fall in the GP Rate could only be a ground for making further in-depth inquiries but could not be by themselves a ground for rejection of books of account since in terms of statutory provisions of Section 145(3), the books could be rejected only in situation where Ld. AO was not satisfied about the correctness or completeness of the accounts of the assessee. This condition, in the present case, in our opinion, has remained unfulfilled. Similar additions were made in the quantum assessment for AYs 2011-12 & 2012-13. The matter for AY 2011-12 reached up-to the level of this Tribunal wherein the Tribunal rejected the stand of revenue in rejecting assessee’s books of accounts. During impugned AY, the Ld. first appellate authority, relying upon the stand of Tribunal in AY 2011-12, has over-ruled the stand of Ld. AO in rejecting the books and estimating the income on the basis of GP rate. Nothing on record suggest that the aforesaid order of the Tribunal for AY 2011-12 has ever been overruled by any competent judicial authority. There is no change in the material facts or circumstances during impugned AY - The stand of Ld. AO in rejecting the books of accounts u/s 145(3) and making addition on the basis of GP rate could not be upheld and therefore, we see no reason to interfere with the impugned order. - decided against revenue Disallowance u/s 40(a)(ia) - depreciation u/s 32 disallowed - Held that:- Depreciation being statutory allowance in nature and not an actual outgoing for the assessee and therefore, could not be disallowed by applying the provisions of Section 40(a)(ia). The assessee’s appeal stands allowed.

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• 2019 (1) TMI 1055
  Penalty u/s 271(1)(c) - Deduction u/s 80IC - AO restricted the claim from 6th year onwards to 25% - substantial expansion had a long history of oscillations gone through various Judicial Authorities - Held that:- The assessee has been found to have declared all the details in his return of income while claiming the exemption. Hence in accordance with explanation 1(B) to section 271(1)(c), since the action of the assessee in claiming the exemption can be considered as a bonafide belief that the assessee is rightly eligible for claim of exemption and hence no penalty can be levied under section 271(1)(c). We hereby decline to interfere with the order of the CIT(A) in deleting the penalty levied by the Assessing Officer under section 271(1)(c) - Decided against revenue.

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• 2019 (1) TMI 1054
  Addition u/s 40A - cash payments in excess of ₹ 20,000/- - Held that:- AO made addition of ₹ 11,82,240/- on account of non submission of certain bills, incomplete details in some cases and violation of provision u/s 40A(3) on account of cash payments in excess of ₹ 20,000/-. It is the case of the assessee as per grounds of appeal that all the payments were made through account payee cheques and therefore provision of section 40A(3) are not applicable. Considering restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate its case by producing the relevant details. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. - Appeal filed by the assessee is allowed for statistical purpose.

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• 2019 (1) TMI 1053
  Penalty levied u/s 271(1)(c) - income declared under different head of income - rental receipts as business income or house property - Held that:- The assessee had shown rental receipts as ‘business income’, whereas the AO considered it to be taxable under the head ‘income from house property’. In the process the AO disallowed all expenditures including depreciation to the tune of ₹ 20,13,226/-. In the case of CIT v. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] it has been held that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(1)(c). CIT v. Ajaib Singh & Co. [2001 (8) TMI 79 - PUNJAB AND HARYANA HIGH COURT] “that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that the particulars furnished by the assessee are wrong. Disallowance of an expense per se cannot mean that the assessee has furnished incorrect particulars of its income. Concealment involves penal action. It has to be proved as a conscious Act. It is true that direct evidence may not be available in every case. Yet, it must be proved as a necessary corollary from the facts and circumstances established on the record. - Decided in favour of assessee.

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• 2019 (1) TMI 1052
  Charitable activities - Denial of exemption u/s 11 - micro finance activities are held to be commercial in nature and therefore, the assessee society is not eligible for claiming exemption - Held that:- AO noticed that the assessee society provided services to the SHGs in the name of ‘charity’ by collecting service charges and higher interest from them for managing its own expenses. Though the assessee claims that it was offering services to the poor, AO observed that no services were provided to the poorer on ‘free of cost’. Therefore, by invoking the provisions of section 2(15) r.w.s. 13(8) AO denied the claim of exemption under section 11 of the Act. However, in the appellate order, the CIT(A) has not given any findings as to whether the assessee is eligible to claim exemption under section 11 of the Act since the assessee was carrying out micro finance activity. Under the above facts and circumstances, we remit the issue to the file of the ld. CIT(A) for adjudication and passing detailed speaking order keeping in mind the decisions of the Tribunal as relied on by the ld. DR. Thus, the ground raised by the Revenue is allowed for statistical purposes. Violation committed by the assessee society by spending more than 50% towards administrative expenses - As in the case of Maddi Venataraman & CO. (P.) Ltd. v. CIT [1997 (12) TMI 3 - SUPREME COURT], wherein, as held that it is against the public policy to allow the benefit of deduction under one statute of any expenditure incurred in violation of the provisions of another statute. In view of the above decision of the Hon’ble Supreme Court, we find that the assessee has clearly violated the Foreign Contribution Regulations Rules, 2011 and thus, the ground raised by the Revenue is allowed. Rent paid by the assessee society to its accountant - Held that:- Since the owner of the building insisted the rent in cash, the Financial Controller of the Society drew a cheque in his own favour, encashed the same and paid the same to the building owner. Moreover, it was submitted that the said rent was not paid from the resources of the society. On perusal of the appellate order, we find that without asking any details from the assessee, the ld. CIT(A) has simply sustained the addition. We find that the provision made for rental was duly agreed by the concern agency and accordingly, out of the foreign fund, the said expenditure was met out as contended by the assessee in its written submissions that the said rent was not paid from the assessee’s fund. In view of the above facts, the addition made and sustained by the ld. CIT(A) stands deleted. Disallowance 50% of the salary paid to the Secretary of the assessee society - Held that:- By considering the qualification, experience, etc. and since the Assessing Officer has not allowed any reasonable portion of salary claimed to have paid to the Secretary, the ld. CIT(A) has reasonably allowed 50% of the disallowance of salary paid to the secretary and the balance was rightly sustained. The above allowance of 50% of salary to the Secretary by the ld. CIT(A) was not at all disputed by the Department in its appeal before the Tribunal, we find no reason to interfere with the order passed by the ld. CIT(A) and accordingly, the ground raised by the assessee stands dismissed.

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• 2019 (1) TMI 1051
  Addition as undisclosed sales - Held that:- CIT(A) in his order has given a factual finding that the assessee has an opening stock of ₹ 93,41,400/-, as on 01/04/2007 and this was disclosed under the head “owned stock” in the balance sheet filed along with the income tax return for the Assessment Year 2007-08. What was sold by the assessee during the year was from this opening stock. D/R could not controvert these factual findings of the CIT(A). CIT(A) held that the Assessing Officer’s finding in the remand report as well as in the assessment order were perverse and against the facts of the case. We find no infirmity in such findings. Thus we dismiss all these grounds of the revenue.

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• Customs

• 2019 (1) TMI 1050
  Valuation of imported goods - Hot Rolled Coils (HR Coils) - rejection of declared value - similar goods or not? - Revenue wants to enhance the declared value of HR Coils on the bases of alleged contemporaneous imports HR Plates - Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Section 14 of the Customs Act. Held that:- The valuation of imported goods is required to be done in terms of Section 14 ibid read with the Customs Valuation Rules, 2007. The transaction value of imported goods can be rejected only as per the provisions of Rule 12 ibid. As per Clause (iii) of explanation under Rule 12, if contemporary import of identical or similar goods is noticed at the higher price, invoice value can be rejected and same can be determined under Rule 5 to 9 of the Rules. The said rule 12 ibid provide for proper officer seeking clarification from the importer to provide further information to satisfy the correctness of the declared assessable value - In the present case, the respondents did submit the invoice, irrecoverable LC and supporting contract documents with reference to the impugned consignments. Nothing more is required with the importer to further substantiate the value. Merely because the assessee failed to submit any payment certificate or Bill of Exchange, the Assessing officer rejected the value declared by the respondent/assessee. The Assessing officer has to give valid reasons in order to reject the declared value and thereafter to proceed with the re-assessment, after due enhancement. Explanation (1)(i)(iii)(a) in Rule 12 appears to have applied by the adjudicating authority in the present case. As per case records, the assessing officer having noticed higher value of contemporaneous import of HR Steel Plates, raised the doubt regarding the correctness of declared value. The legal provisions mentioned in the Explanation clearly stipulates that the contemporaneous value should be significantly higher for identical or similar goods at or about the same time, in a comparable commercial transaction. We find in the present case due examination about this crucial aspect has not been done by the assessing officer and comparison based on the contemporaneous import is not proper. Whether the HR Steel Plates, with which the adjudicating authority has compared the HR Coils, are really similar goods in terms of definition of similar goods? - Held that:- HR Coil and HR Steel Plates cannot be said to be similar or identical goods. If the revenue is rejecting the value declared by the respondent, then they are bound to prove beyond reasonable doubt that the goods compared with are similar goods or identical goods. In our view HR Coils and HR Plates cannot be termed as one and the same for the purpose of contemporaneous value. Both the goods are different in nature and therefore the values relied upon by the Department for enhancement of declared value is not legally sustainable. It is not the case of revenue that it is either a Hawala transaction or remittance of additional consideration by the respondent to the exporter, over and above the declared transaction value. The value declared by the respondent was to be remitted through the banking channel. The revenue has failed to establish its claim on the basis of contemporaneous import. The major factor which prompted the learned Commissioner to set aside the order-in-assessment passed by the Adjudication Authority was that in arriving at figure of US $ 460 PMT the Adjudicating Authority relied upon the value of import of HR Steel Plates and since HR Coils & HR Steel Plates are not similar, therefore there was no reason to doubt the truth or accuracy of the value declared by the respondent - the Adjudicating Authority has erred in rejecting the declared price/transaction value of the goods imported by the respondent by taking recourse to Rule 12 of Customs Valuation Rules, 2007. Appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 1049
  Valuation of imported goods - import of goods from their principals M/s Aquatech International Corporation USA - related party transaction or not - enhancement of invoice value by 10% under Rule 7A of Valuation Rules 1988/ Rule 8 of Valuation Rules, 2007 - Rule 9(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 - addition of royalty charges to value of imported goods in terms of Rule 9(1) (c) of Valuation Rules, 1988 and 10(1) (c) of the Valuation Rules, 2007. Enhancement of invoice value by 10% under Rule 7A of Valuation Rules 1988/ Rule 8 of Valuation Rules, 2007 - Held that:- The Adjudicating authority has recorded findings that: On comparison of the prices of the in terms of rule 3(3)(b)(iii) ibid in column 4 6 of the Table I find that the supplier has taken nearly 10% margin of profit on the prices procured by them from other vendors. In a normal trade practice, if the goods are being exported to India by the suppliers, there are some addition like marketing, selling expenses, administrative and other general expenses, tax liability, depreciation of the factory investments, loading, unloading charges, handling charges, internal freight charges, insurance profit etc in determining the prices for the purpose of export. This all addition constitutes from 15% to 25% in addition to the procured prices. However, only 10% has been added by the supplier for exportation of the goods to the Indian importer. Accordingly, the invoice value may be loaded to the tune of 10% in terms of Rule 8 of Customs Valuation Rules, 2007 read with section 14 of the Customs Act, 1962 (as amended time to time). - Though these findings and addition were challenged by the appellant in their appeal before the Commissioner (Appeal), Commissioner (Appeal) has not recorded any finding in his order in this respect. Hence matter for consideration of additions as ordered by the adjudicating authority under Rule 7A of Valuation Rules 1988/ Rule 8 of Valuation Rules 2007 needs to be remanded back to the Commissioner (Appeal) for consideration of the issue. Addition of royalty charges to value of imported goods in terms of Rule 9(1) (c) of Valuation Rules, 1988 and 10(1) (c) of the Valuation Rules, 2007 - Held that:- The value of the imported goods is included in project value and royalty has been paid on the project value determined inclusive of the value of imported goods. Thus in terms of the law laid down by the Apex Court in case of Matsushita Televisions [2007 (4) TMI 5 - SUPREME COURT OF INDIA], the conditions for addition of royalty charges as laid down in Rule 9 (1)(c) of the Valuation Rules, 1988 are satisfied in the present case - there are no merits in the submissions of the appellants in relation to addition of royalty charges in the value of imported goods in terms of Rule 9 (1) (c) of Valuation Rules, 1988/ Rule 10(1)(c) of Valuation Rules 2007 - Thus, the issue of addition of Royalty Charges will be dependent on the terms and condition of Royalty agreement. Appeal allowed in part by way of matter on remand.

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• 2019 (1) TMI 1048
  Finalization of provisional assessment - import of coconut oil against advance licence under the Duty Exemption Entitlement Certificate - section 18 of Customs Act, 1962 - whether, in accordance to the specifications in the advance licence, the import was to be allowed? Held that:- No justification is been offered in the grounds of appeal for placing reliance on the lauric value other than the determination in the test report. The Manual of Methods of Analysis of Oils Fats issued by the Director General of Health Services, Government of India has options for utilisation of factors for conversion of the three acids and emphasizes that the acid value would remain unchanged. Hence, it would appear that conformity with the threshold of the range prescribed in the license, with any one of the three in relation to the acid value , and which is not disputed, should suffice - In the test report, there is no dispute that it is coconut oil that has been imported. It is also not in dispute that the imported product is in raw form. The license does not bar the import of raw coconut oil ; neither the license nor the grounds of appeal adduce any importance to the range of 3% to 6% mandated in the license. It would, therefore, appear that any derived conformity with the threshold of the range should suffice. The computation approved by the first appellate authority is not unreasonable. Appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 1047
  Valuation of imported goods - Hot Rolled Coils (HR Coils) - rejection of declared value - similar goods or not? - Revenue wants to enhance the declared value of HR Coils on the bases of alleged contemporaneous imports HR Plates - Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Section 14 of the Customs Act. Held that:- The valuation of imported goods is required to be done in terms of Section 14 ibid read with the Customs Valuation Rules, 2007. The transaction value of imported goods can be rejected only as per the provisions of Rule 12 ibid. As per Clause (iii) of explanation under Rule 12, if contemporary import of identical or similar goods is noticed at the higher price, invoice value can be rejected and same can be determined under Rule 5 to 9 of the Rules. The said rule 12 ibid provide for proper officer seeking clarification from the importer to provide further information to satisfy the correctness of the declared assessable value - In the present case, the respondents did submit the invoice, irrecoverable LC and supporting contract documents with reference to the impugned consignments. Nothing more is required with the importer to further substantiate the value. Merely because the assessee failed to submit any payment certificate or Bill of Exchange, the Assessing officer rejected the value declared by the respondent/assessee. The Assessing officer has to give valid reasons in order to reject the declared value and thereafter to proceed with the re-assessment, after due enhancement. Explanation (1)(i)(iii)(a) in Rule 12 appears to have applied by the adjudicating authority in the present case. As per case records, the assessing officer having noticed higher value of contemporaneous import of HR Steel Plates, raised the doubt regarding the correctness of declared value. The legal provisions mentioned in the Explanation clearly stipulates that the contemporaneous value should be significantly higher for identical or similar goods at or about the same time, in a comparable commercial transaction. We find in the present case due examination about this crucial aspect has not been done by the assessing officer and comparison based on the contemporaneous import is not proper. Whether the HR Steel Plates, with which the adjudicating authority has compared the HR Coils, are really similar goods in terms of definition of similar goods? - Held that:- HR Coil and HR Steel Plates cannot be said to be similar or identical goods. If the revenue is rejecting the value declared by the respondent, then they are bound to prove beyond reasonable doubt that the goods compared with are similar goods or identical goods. In our view HR Coils and HR Plates cannot be termed as one and the same for the purpose of contemporaneous value. Both the goods are different in nature and therefore the values relied upon by the Department for enhancement of declared value is not legally sustainable. It is not the case of revenue that it is either a Hawala transaction or remittance of additional consideration by the respondent to the exporter, over and above the declared transaction value. The value declared by the respondent was to be remitted through the banking channel. The revenue has failed to establish its claim on the basis of contemporaneous import. The major factor which prompted the learned Commissioner to set aside the order-in-assessment passed by the Adjudication Authority was that in arriving at figure of US $ 460 PMT the Adjudicating Authority relied upon the value of import of HR Steel Plates and since HR Coils & HR Steel Plates are not similar, therefore there was no reason to doubt the truth or accuracy of the value declared by the respondent - the Adjudicating Authority has erred in rejecting the declared price/transaction value of the goods imported by the respondent by taking recourse to Rule 12 of Customs Valuation Rules, 2007. Appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 1046
  Import of Off Grade Copper Cathode under Advance Authorization - Benefit of N/N. 99/2009-Cus. dated 11.09.2009 denied on the ground that the imported product namely Copper Cathodes being the output/export product/end product does not figure in the Foreign Trade Policy (FTP) Vol. 2 Input-Output Norms for duty exemption schemes - Held that:- The issue in dispute concerning eligibility to import Off Grade Copper Cathode has been more than clarified by the DGFT vide their letter dated 07.05.2013 which inter alia gratifies the import of the Off Grade Copper Cathode - Both the conditions namely 1(iii) of Notification No. 99/2009-Cus. as well as paragraph 4.24 A(a)(iv) of HBP v.1 require the authorization holder to submit an application in Aayat Niryat Form along with prescribed documents before making the shipment. The phrase before making the shipment is only to be interpreted as before making the first export shipment and surely not before the receipt of the first import of raw material from overseas. The premises on which the ground of appeal has been filed by the Revenue is flawed - appeal dismissed - decided against appellant.

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• 2019 (1) TMI 1045
  Condonation of delay of 1745 days in filing - delay occurred on account of the revision application before the Revisionary Authority - Section 14 of Limitation Act - Held that:- The delay in this case is not deliberate and intentional but the same has occurred on account of the fact that the appellant has approached the wrong forum by filing the revision petition before the Revisionary Authority and the Revisionary Authority after four years has disposed of the revision petition directing the appellant to file the appeal before the CESTAT and thereafter from the decision of the original authority, the appellant has filed the present appeal within a period of one week. The time taken in pursuing the case before the wrong forum has to be excluded and after excluding the same, it is found that the appeal has been filed within a week from the receipt of the order of the Revisionary Authority. Delay condoned - CO application allowed.

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• Insolvency & Bankruptcy

• 2019 (1) TMI 1044
  Insolvency Professional Entity (IPE) recognition - consequences of non comply with the provisions of regulation 12 - nonrecognition - Held that:- One IPE, namely, Integro Insolvency Professionals Private Limited (formerly known as Integro Insolvency Professionals Services Private Limited), has confirmed its non-compliance vide e-mail dated 30th November, 2018. Therefore, the Board hereby de-recognises Integro Insolvency Professionals Private Limited (formerly known as Integro Insolvency Professionals Services Private Limited) bearing recognition number IBBI/IPE/0031, in accordance with Regulation 14 of the said Regulations with effect from 1st October, 2018 for non-compliances of Regulations 12(1)(a), 12(1)(b), 12(1)(c) and 12(1)(g) of the aforesaid Regulations. Consequently, the thirteen IPEs listed in Para 5, 6 and 7 are hereby directed to forthwith: (a) surrender their original certificates of recognition to the Board; and (b) inform the concerned Registrar of Companies about their de-recognition. Notwithstanding the de-recognition, the aforesaid IPEs shall be jointly and severally liable for all acts or omissions, if any, of its partners or directors as insolvency professionals committed during such partnership or directorship, in accordance with sub-regulation (3) of regulation 13 of the Regulations.

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• Service Tax

• 2019 (1) TMI 1043
  Refund of unutilized CENVAT Credit - Export of services or not - technical testing and analysis services - Rule 5 of CCR - rejection of refund on the ground that technical testing and analysis services provided by the Appellant cannot be termed as export of service - Held that:- Tribunal in another decision in Appellants’ own case involving identical issue in Fertin Pharma Research & Development Pvt. Ltd. vs Commissioner of CGST, Navi Mumbai [2018 (10) TMI 1373 - CESTAT MUMBAI] decided the issue in favor of the Appellant by holding that this Tribunal has already taken a view that the services rendered by the appellant are in the nature of export service and hence eligible to cash refund of accumulated CENVAT Credit. The Appellants are entitled for the refund claim of unutilized Cenvat credit - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1042
  Penalty u/s 78 of FA - non-payment of service tax - management, maintenance and repair service - erection, commissioning and installation service - CENVAT credit - Held that:- Insufficiency of credit may, at a stretch, be ground for ordering recovery of non-appropriated portion of confirmed amount. It is beyond the sanction of law to decide on availment of CENVAT credit without a notice, proposing to deny and without disclosing intent to order recovery, based on the facts available at the time of issue. That which is beyond the competence of the original authority is not amenable to appellate jurisdiction on the merit of liability. Penalty u/s 78 - Held that:- From the manner in which the adjudicating authority has arrived at its conclusions, we are unable to ascertain if the ingredients of section 78 are apparent in the matter of inadequacy of credit or in the failure to discharge service tax upon the rendering of the taxable service - The grounds of appeal appear to focus on the legality and propriety of the course of action adopted by appellant and in the plea for relief it is claimed that interpretation of rule 3(4) of CENVAT Credit Rules, 2004 erases the scope for invoking the provision - penalty not warranted. We set aside the impugned order to enable fresh adjudication. We also adjure the original authority to restrict the proceedings to the show cause notice - appeal allowed by way of remand.

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• 2019 (1) TMI 1041
  Penalty u/s 76 and 78 of FA - Non-payment/delayed payment of Service Tax - period from 10/2002 to 2/2009 - the appellant has been continuously defaulting the payment of Service Tax over the years and periodical SCNs have been issued - Held that:- The delay in payment of Service Tax by itself would not reveal intent to evade payment of duty and for the reason that there has been a delay in payment of Service Tax, fraud, suppression, collusion, etc. cannot be alleged. The statute has provided for payment of interest for delayed payment of Service Tax. It means that statute has provided for cases/situations where there is a possibility of payment of Service Tax. Moreover, there is a penalty under Section 76 for delayed payment. Therefore, invoking of Section 78 for delayed payment in itself is not acceptable. The penalty under Section 78 for the period 10/2002 to 8/2007 was either not proposed or dropped by Commissioner and for the period 5/2008 to 2/2009, penalty under Section 78 has not been proposed at all in the SCN. This being the situation, proposal and confirmation of penalty under Section 78 during the period 9/2007 to 10/2007 alone defies logic as there was no change in the circumstances or the procedure adopted by the appellants. The ingredients of Section 78 are not fulfilled as no suppression, fraud etc. can be alleged where the Department is well aware of the practice adopted by the appellants and SCNs have been issued continuously. As discussed above, penalty under Section 78 was not even proposed in the subsequent SCNs - penalty u/s 78 not imposable - However, due to continuous default in payment of Service Tax, the appellants are liable to pay penalty imposed under Section 76. The appeals are partly allowed by confirming duty demanded and penalty imposed under Section 76. However, penalty imposed under Section 78 of the Finance Act, 1994 is set aside.

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• 2019 (1) TMI 1040
  Levy of Service tax - construction of mobile tower foundation - related civil works performed by the appellant - period from December 2004 to June 2007 - Held that:- For the period after 01.06.2007, the Chennai Bench of the CESTAT in the case of M/s. Real Value Promoters Pvt. Ltd. & Ors. Vs. Commissioner of G.S.T. & Central Excise, Chennai & Ors. [2018 (9) TMI 1149 - CESTAT CHENNAI] have extrapolated the ratio laid down by the Hon’ble Apex Court in M/s. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] and held that even after 01.06.2007, service tax liability for composite contracts can only be demanded under Works Contract Service and not under CICS, etc. The impugned Order demanding the amount of tax liability under CICS for a composite contract will not survive - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1039
  Penalty u/s 77 and 78 of FA - non-payment/short payment of service tax - the appellant had got itself registered and paid service tax with interest and late fee - Held that:- Essentially, it implies that the Revenue should have reasons before alleging fraud, suppression etc. and secondly, the provisions of Section 78 stand controlled by Section 80 of the Finance Act, 1994, ibid. This makes that for every default, penalties under Section 77 and 78 are not automatic. In the case on hand, much before the issuance of show cause notice the assessee has got itself registered, paid the taxes along with applicable interest and this also is established by the fact that the same is appropriated in the Order-in-Original - In the SCN as well as the orders of the lower authorities, the Revenue has but for reiterating the wordings in the Sections itself, has not gone beyond that to put on record any reasons on the alleged malafides, fraud or suppression, etc. - penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1038
  Manpower Recruitment/Supply Agency - Works Contract - short payment of service tax - there is a difference between the taxable values shown in the ST-3 Return when compared with the amount received in bank account for the period 2009-10 to 2013-14 - Held that:- The Original Authority has come to the conclusion that the interest amount paid by the appellant does not relate to the present demand but relate to some other audit objection but the same has not been categorically brought on record as to which demand, this interest payment has been made by the appellant. The Original Authority could have easily verified the fact as to which demand, this interest relates to but the same has not been specifically verified by the Original Authority and the Commissioner (A) has also not gone in to this aspect and simply confirmed the Order-in-Original. Further, since the appellant has paid the Service Tax prior to the issuance of SCN and also paid the reduced penalty of 15%. In view of this, the imposition of equal penalty under Section 78 is not sustainable in law therefore the said penalty is set aside and with regard to the interest payment made by the appellant, it is to be ascertained whether the said payment relates to the present demand or earlier demand. For this purpose, the matter is remanded back to the Original Authority. Appeal allowed by way of remand.

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• 2019 (1) TMI 1037
  Reverse charge mechanism - services received by the appellant from the service providers situated abroad - Intellectual Property Right service on transfer of technical know-how - activity of technical testing and analysis rendered outside India - commercial training or coaching service rendered outside India - sub-section (1) of Section 73(1) of the Finance Act, 1994 - extended period of limitation - penalty. Intellectual Property Right service on transfer of technical know-how - Held that:- Know-how is not recognized as Intellectual Property law by any Indian Law for the time being in force. In fact know-how is the undisclosed information cited by the Department clarification dt. 10/09/2004 as example of intellectual property right not covered by any Indian law. The transaction in the present case was for know-how which is in the nature of property, no service was provided by the foreign companies - there cannot be any service tax on technical know-how - demand set aside. Activity of technical testing and analysis rendered outside India - Held that:- Though the appellant had challenged the same but during the course of argument, the learned counsel for the appellant submitted that they are not challenging the same. Commercial training or coaching service rendered outside India - Held that:- The seminar was exclusively conducted outside India. Further, it is found that appellant has also attached the copies of the certificates showing the payment for the seminar which were conducted outside the country. In view of these facts, it can be said that since training and coaching service happened outside India, the appellants were not liable to pay service tax as the same is excluded from the ambit of Rule 3(1)(ii) of the Rules. Extended period of limitation - penalty - Held that:- The Department has invoked the extended period of limitation as the period of dispute relates to January 2007 to December 2007 but the show-cause notice was issued on 20/10/2008 - the Department was aware of all the payments made by the appellant to their foreign companies for transfer of technical knowhow which came to the knowledge of the Department in July 2005 itself and show-cause notice was issued - further, in the present case, the demand is on reverse charge basis in terms of Section 66A of the Finance Act and the appellant will be entitled to take the credit of entire service tax and the entire exercise is revenue neutral - extended period of limitation is not invocable - no penalty can be imposed on the appellant sunder Section 78 of the Act. Appeal allowed in part.

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• 2019 (1) TMI 1036
  Classification of activity - manufacture or service? - process of retreading - levy of service tax - penalty - Held that:- The process of retreading done by the respondent is not manufacturing process as no new product emerges but it is a process in which the pre-cured tread rubber/tread rubber is affixed on the surface of the worn-out tyres and subjecting the same to a process of curing in tyre mould using steam and this activity fall under the category of 'Maintenance, repairs and reconditioning service'. The Division Bench of this Tribunal in the case of Udaipur Tyre Retreading Co. P. Ltd. [2015 (9) TMI 1575 - CESTAT NEW DELHI] has held that the activity of retreading of tyre does not tantamount to maintenance and repair including the recondition or restoration or servicing of motor vehicles. Penalty - Held that:- Since the issue relates to interpretation and there were divergent views during the relevant period, penalties set aside by invoking section 80. Appeal allowed in part.

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• 2019 (1) TMI 1035
  Interest on the inadmissible CENVAT credit - credit on capital goods taken but not utilized and is reversed - Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 - Held that:- The appellant has taken irregular credit but the same was not utilized and it was merely a book entry - in the case of Shiv Om Paper Mills Ltd. [2015 (9) TMI 1484 - CESTAT NEW DELHI], the Tribunal has held that when full credit was availed instead of 50% of the credit, no interest was required to be paid where the credit taken inadvertently was not utilized. The impugned order demanding interest is not sustainable - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1034
  Time Limitation - Non-payment of Service tax - contention of the department was that the appellants have realized charges for the services rendered from their clients but failed to collect and pay to the Government - Held that:- The credentials of the appellant have been squarely established as the appellants have sought the clarification well before hand. If the learned Commissioner entertains such a doubt in 2006, the appellant being a common man has all the more reason to be ignorant about the provisions of law in 1998. It is on record that the department has not replied to the clarification sought by the appellants - extended period cannot be invoked, more so, as the appellants were regularly filing ST-3 returns and have been discharging duty as per their understanding. SCN do not survive of limitation - impugned order is deserved to be set aside as far as the demand beyond normal period is concerned - the impugned order is modified to the extent that the demand of service tax is restricted to ₹ 95,905/-, which is to be appropriated from the deposit made by the appellants - appeal allowed in part.

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• 2019 (1) TMI 1033
  Complaince with mandatory pre-deposit - compliance made by reversing 7.5% of the duty demanded through Central Goods and Service Tax Credit - Held that:- The appellants have reversed 7.5% of the duty demand through the CGST Credit and the same is indicated in the Column 4B(2) of the GSTR-3B filed for the month of August 2018 - The learned AR also accepted the legal position that mandatory pre-deposit can be made through the CGST Credit. The objection raised by the Registry is not tenable and the same is set aside.

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• Central Excise

• 2019 (1) TMI 1032
  Rejection of Settlement Application - rejection on the ground that petitioner not making full disclosure - Section 32E of the Central Excise Act, 1944 - clandestine removal - suppression of true quantity and under valuation of the goods - petitioner contends that given the mandate of Section 32L(1), the Commission was bound to consider the application and record its reasons for its order, and could not reject the application in the manner it did i.e. to remit the matter to the Adjudicating Authority. Held that:- This Court is of the opinion, that the petitioner s submissions with respect to the lack of jurisdiction or authority of the Commission to reject the application after entertaining it under Section 32E are insubstantial. The rejection of an application is possible at both stages either at the stage of admission [Section 32E] or later, at the stage of hearing [Section 32K] - In the present case, the Commission had entertained the petitioner s application expressly subject to the condition that the applicant show at the time of final hearing that they fulfill the conditions of section 32 E of the Central Excise Act, 1944 . Parties had proceeded on this basis. This Court is fortified in the view that is expressed by the judgment in Union of India v. Dharampal Satyapal [2013 (10) TMI 238 - DELHI HIGH COURT] where it was held that It is true that on and after 01.06.2007 the Settlement Commission need not call for a report from the Commissioner before the settlement application is allowed to be proceeded with. However, the requirement that the settlement application shall contain a full and true disclosure continues to remain in the statue and it is, therefore, the duty of the Settlement Commission to examine this aspect by itself on the basis of explanation provided by the applicant. In the present case, the reasons furnished by the Commission for rejecting the petitioner s application i.e., the petitioner not making full disclosure, but rather persisting in its contention that the original value of clearances and the quantum that was cleared was the true and correct value, fully justified the decision that it took - petition dismissed.

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• 2019 (1) TMI 1031
  Rectification of mistake - due to inadvertence, in paragraph 1 of the order dated 04.10.2018 made in Tax Appeal No. 320 of 2018, reference has been made to “Income Tax Appellate Tribunal” instead of “Customs, Excise and Service Tax Appellate Tribunal” - Held that:- In paragraph 1 of the order dated 04.10.2018 made in Tax Appeal No. 320 of 2018 instead of words “Income Tax Appellate Tribunal”, the words, “Customs, Excise and Service Tax Appellate Tribunal” shall stand substituted - The note stands disposed of.

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• 2019 (1) TMI 1030
  Supplies effected to M/s Vidharba Irrigation Development Corporation established by an enactment of the state legislature - benefit of N/N. 74/93- CE dated 28th February 1993 - SSI Exemption - N/N. 8/2003-CE dated 1st March 2003 - Held that:- The notification claimed by the respondent does, in the circumstances of a factory belonging to or maintained by a state government, consider each such factory to be independently eligible for the exemption applicable to small-scale industries - The interpretation of the intent of the sovereign legislature to consider each establishment on its own in the referred decisions requires us to follow them - appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 1029
  CENVAT Credit - capital goods or inputs - Chemical Compounds, Paints and Thinner, Fan Ring, Fan Guard, Coloured Steel, Collecting Electrode, Fabricated Structure, Beams, Steel Wire Rope, Chain part thereof, Painted Grating, Aluminium Coil, Rolled Aluminium, Metal Bellows, Tool Bit and Rotating Arrangement Geared Unit - Held that:- It is brought out by the decision of the Larger Bench in Commissioner of Cus. & C.Ex., Meerut-I Vs. Modi Rubber Ltd. [2000 (5) TMI 64 - CEGAT, NEW DELHI] that if the Credit is not eligible as capital goods and if the same qualifies as inputs, the Credit ought to be allowed. The impugned items in the present appeal are Chemical Compounds, Paints and Thinner, Fan Ring, Fan Guard, Coloured Steel, Collecting Electrode, Fabricated Structure, Beams, Steel Wire Rope, Chain part thereof, Painted Grating, Aluminium Coil, Rolled Aluminium, Metal Bellows, Tool Bit and Rotating Arrangement Geared Unit. These items fall within the definition of “inputs” - credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1028
  CENVAT Credit - input - iron scrap generated at the appellant’s end as job workers for M/s. BHEL, Tiruchirapalli - M/s. BHEL, Tiruchirapalli, have paid excise duty on the entire quantity of scrap generated by the appellant - Held that:- What is important is that the generated waste and scrap should suffer from excise duty, as applicable. That in this case, it is not disputed that M/s. BHEL, Tiruchirapalli, have paid excise duty on the entire quantity of scrap generated by the appellant. It is also not disputed that they have taken the Credit only based on such invoices - The matter is fully covered by the decision in M/s. Dynamic Dish India Ltd. [2013 (10) TMI 943 - CESTAT BANGALORE] - credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (1) TMI 1027
  CENVAT Credit - input services - commission paid to their agents - Contradicting decisions - Held that:- In view of the two contradictory decisions, the legislature took a call for explaining the meaning of sales promotion holding that Taking into circumstances under which the Explanation was inserted in Rule 2(l) of Rules, 2004 and consequence of the Explanation to extend the benefit to the assessee as per Board Circular, we hold that the Explanation inserted in Rule 2(l) of Rules, 2004 by Notification No. 2/2016-CX (N.T.) should be declaratory in nature and effective retrospectively. Commissioner(Appeals) has committed no error while allowing the assesees’ Appeal - appeal dismissed - decided against Revenue.

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• 2019 (1) TMI 1026
  Clandestine manufacture and removal - shortage of finished goods - proper accounting of goods received from job-workers not done - clandestine manufacture on Sundays - Excisable goods were lying in the sister concern without obtaining any permission and without payment of duty - Held that:- The officers have noticed that there is a shortage on the basis of the weight written on the rolls. On this basis, they concluded that whereas as per RG-1, stock could have been 24,039 Kg and actual stock was 11,270 Kg. The appellant's contention was that the shortage arrived on the basis of estimation is not acceptable and that the stock as per RG-1 has been cleared subsequently on payment of duty and on valid invoices. We find that the appellant's contention is acceptable for two reasons one being that the entire stock of 24,039 Kg has been accounted in the clearance subsequently. Therefore, there is no reason to demand duty again on the stock alleged to have found short - Moreover, as held in a catena of judgment clandestine removal cannot be alleged merely on the basis of shortage found - other than alleging that the goods were found shortage, the Revenue has not produced any evidence to show that the goods have been clandestinely manufactured and cleared. There is no evidence to the effect of purchase of raw-material, consumption of electricity, wages to labour, production, clearance, transportation of sale proceeds etc which could have been used to prove the alleged clandestine removal are not forthcoming. Therefore, this allegation is not substantiated. Non-accountal of goods received from job-worker - Held that:- The appellant's contention regarding receipt of captive consumption do not appear to be a valid at least as far as the goods received from the job-workers are concerned. If it was the case of the appellant that the entire quantity is accounted for in RG-1, the contentions of no evidence being available for evidencing clandestine removal would have been acceptable - In the absence of the same, we find that the appellants are required to discharge duty on this difference quantity. Non-accountal of production and clearance on Sundays or certain dates - Held that:- The ownership and the authenticity of the notebook/record are not established. The appellants contended that the names mentioned therein are not the employees as can be verified by their master or the record submitted to ESIC. Moreover, we find that the Department has not come forth with any further proof of clandestine removal. It was also submitted that the register alleged to have been maintained at the security gate showing transportation of the goods maintained by one Shri. Kannan, Security In-charge. As per the show-cause notice itself said Shri. Kannan could not be traced and therefore the investigation mechanism incomplete and inconclusive. Such being the averments in the show-cause notice, we fail to understand as to how the Department has concluded the allegation on the appellants - contention of Department cannot be established. Seizure of 1.60 MT of finished goods in the adjoining premises of M/s. Deepak Filaments - Held that:- It is not coming forth from the case records whether the same was accounted for in RG-1. There is no allegation by the Department that the same is removed without payment of duty. However there is certainly a procedural infraction. There was no reason as to what stopped the appellant from informing the authorities and obtaining the due permission. In such circumstances, Department in its right to seize such material and order for confiscation - while upholding confiscation, the quantum of redemption fine is reduced. Penalty on Shri. Dhiraj Sipani, partner of the appellant - Held that:- Keeping in view the fact that he was the partner of the company and was present during the proceedings of mahazar. In all certainty as a partner he could have been in a better position to explain the working of the factory then Shri. Ravi Kumar. Moreover, without recording the statement of Shri. Dhiraj Sipani, the Department has proceeded to impose penalty on him - penalty do not sustain. Matter remanded back to the original adjudicating authority to quantify the duty applicable on 18,221.70 Kg of goods which were not received back from the job-workers after processing and penalty on the same would be equal to the said duty calculated in terms of Section 11AC of the Central Excise Act, 1944 - appeal allowed in part.

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• CST, VAT & Sales Tax

• 2019 (1) TMI 1025
  Attachment of Bank Accounts including cash credit account - section 45(7) of the Gujarat Value Added Tax Act, 2003 - Held that:- The court has considered the request only qua the cash credit account bearing No.918030020580275 maintained by the petitioner with the Axis Bank. This court in Kaneria Granito Ltd. v. Assistant Commissioner of Income Tax [2016 (7) TMI 65 - GUJARAT HIGH COURT] has categorically held that a cash credit account would be in the nature of borrowing by the assessee from the bank, and that the bank and the assessee, therefore, do not have the debtor-creditor relationship. Under the circumstances, when no amount lying in the cash credit account belongs to the petitioner, the question of attaching such account under section 45(7) of the Gujarat Value Added Tax Act, 2003 does not appear to be justified. By way of interim relief, the respondents are directed to forthwith release the cash credit account maintained by the petitioner with the Axis Bank, Navagam Branch - Direct Service is permitted today.

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• 2019 (1) TMI 1024
  Validity of assessment order - assessment year 2012-2013 and 2014-2015 - Held that:- There is no dispute to the fact that the impugned orders of assessment were passed after issuing notice of proposal to the petitioner. It is seen that the petitioner did not respond to the notice - This Court is not inclined to entertain these writ petitions solely on the ground of delay and latches - petition dismissed.

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• Indian Laws

• 2019 (1) TMI 1023
  Divestment of Director, CBI of all his functions - prior consent of the Committee not obtained before passing such order of divestment - Competence of the CVC and the Government of India to divest the Director, CBI of all his powers, functions, duties, supervisory role, etc. - Committee constituted under Section 4A(1) of the DSPE Act to make recommendations for appointment of the Director, CBI - Held that:- There is no manner of doubt that the enactment of the CVC Act, 2003 and the amendments made by the said enactment, inter alia, in the DSPE Act (by Section 26 of the CVC Act, 2003) are a sequel to the operative directions of this Court in paragraph 58 of Vineet Narain [1997 (12) TMI 615 - SUPREME COURT OF INDIA]. The legislature in its wisdom had not considered the necessity of tempering down the directions of this Court in Vineet Narain in any manner whatsoever. The mode and manner of appointment of Central Vigilance Commissioner and Vigilance Commissioners as well as that of the Director, CBI as spelt out by this Court in Vineet Narain has been scrupulously followed by Parliament. In fact, at this stage, we may even take note of the fact that Parliament on its own in amending Section 4A of the DSPE Act by the Lokpal and Lokayuktas Act, 2013 (Act No.1 of 2014) has gone a step further to give effect to the directions of this Court made in Vineet Narain inasmuch as the object for change of the Committee for making recommendations for appointment of the Director, CBI has been stated to be the necessity “to provide a High Power Selection Committee for selection of Director of the Delhi Special Police Establishment” - The Court, in its bid to understand the true legislative intention behind the statutory enactments in question, cannot be oblivious of the views expressed by this Court in Vineet Narain leading to the operative directions in para 58 that formed the basis of the legislative exercise in question. If the legislative intent would have been to confer in any authority of the State a power to take interim measures against the Director, CBI thereby affecting his functioning, surely, the legislation would have contained enabling provisions to that effect and consequently would have been differently worded and drafted. It is against this backdrop that the words “transferred except with the previous consent of the Committee” mentioned in Section 4B(2) of the DSPE Act has to be understood. If the word “transferred” has to be understood in its ordinary parlance and limited to a change from one post to another, as the word would normally convey and on that basis the requirement of “previous consent of the Committee” is understood to be only in such cases, i.e. purely of transfer, such an interpretation would be selfdefeating and would clearly negate the legislative intent. In such an event it will be free for the State Authority to effectively disengage the Director, CBI from functioning by adopting various modes, known and unknown, which may not amount to transfer but would still have the same effect as a transfer from one post to another, namely, cessation of exercise of powers and functions of the earlier post. This is clearly not what the legislature could have intended. Application of Sections 14, 15 and 16 of the General Clauses Act, 1897 - power of Central Government to pass the impugned orders including the order of appointment of an acting Director of the CBI - Held that:- The preceding discussions and our views on the true and correct meaning of the provisions contained in Sections 4A & 4B of the DSPE Act leaves us convinced that the aforesaid provisions of the General Clauses Act will have no application to the present case in view of the clear and apparent intention to the contrary that unequivocally flows from the aforesaid provisions of the DSPE Act. The CVC divesting the powers, functions, duties, supervisory role, etc. of Shri Alok Kumar Verma as Director, CBI is set aside - however, the issue of divestment of power and authority of the Director, CBI is still open for consideration by the Committee.

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