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TMI Tax Updates - e-Newsletter January 27, 2020 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Advance Licence Scheme - it is absolutely no defence of the State authorities to contend that they were not aware of their own notification Validity of SCN issued demanding service tax, post GST - power to inquiry/ investigate/ audit - Writ Petition being devoid of merits, fails Articles GST Audit by Tax Authorities: How to act proactively & best approach to handle the audit IGST paid wrongly under CGST - a taxpayer is directed to pay tax under correct head and claim refund of the tax paid under incorrect head without interest News THE UNION TERRITORY OF DADRA AND NAGAR HAVELI AND DAMAN AND DIU CENTRAL GOODS AND SERVICES TAX (AMENDMENT) REGULATION, 2020 THE UNION TERRITORY OF DADRA AND NAGAR HAVELI AND DAMAN AND DIU GOODS AND SERVICES TAX (AMENDMENT) REGULATION, 2020 Raids on Lalit hotels group, promoter led to ₹ 1,000-Cr black foreign assets: CBDT Government of India and the World Bank sign USD 210 million loan agreement for State of Maharashtra’s Agribusiness and Rural Transformation Project. Search in group running renowned educational institutions in Tamil Nadu Notifications Customs 01/2020 - dated 24-1-2020 - ADD Seeks to amend notification No. 40/2017-Customs(ADD) dated 25-08-2017, to revise anti-dumping duty on imports of "Sodium Nitrite" originating in or exported from China PR, in pursuance of final findings of sunset review investigations issued by DGTR vide notification No. 15/06/2016-DGTR dated the 8th November 2019 Highlights / Catch Notes GST Exemption of “Supply of Farm Labour” - supplier of manpower - The supply of manpower services falling under SAC 99851 is not exempted - the said notification is available to supply of farm labour services falling under Chapter heading 9986 only. Visit to Get Source Classification of goods - Fried Fryums of different shapes, sizes and varieties which are ready to eat - the product ‘Fried Fryums’ is appropriately classifiable under Tariff Item 2106 90 99 - Taxable @18% of GST Visit to Get Source Every governmental function need not be “sovereign” - The parking services provided by the Contractor appointed by the Market Committee, not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority Visit to Get Source No tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law. Visit to Get Source Powers of officers conducting search and seizure to remain stayed in the premises for unlimited period - Key person was not found at home during search - Protection of such action u/s 157 of the GST Acts may unleash a regime of terror insofar as the taxable persons are concerned - this court does not condone any alleged illegal acts on the part of the petitioner and in case he has indulged in any illegalities, the law should take its own course. However, the court found it necessary to pass the present order to curb any further abuse of powers in this manner by the authorities under the GST Acts. Visit to Get Source The powers vested in the officer armed with a search warrant are limited to searching the entire premises. Once the premises are searched, the search party would have to leave the premises and cannot wait there indefinitely for days on end under the expectation that the person whom they are searching for may return home or may contact his family members. Visit to Get Source Income Tax Application for recall of an ex-parte order - Course adopted by the ITAT at the first instance, by dismissing the appeal for non-prosecution, and then compounding the same by refusing to entertain the application for recall of the order, cannot be sustained. Visit to Get Source Extension of time for furnishing online Income Tax return in the Bihar - Tax Payers of Bihar faces ‘unnatural inconvenience’ in not filing income-tax returns within the stipulated period remains unexplained. The petition appears to be espousing private cause instead of public cause. - Petition dismissed. Visit to Get Source Disallowance u/s 37(1) - payments of expenditure by way of cash - Assessee has incurred 90% of expenses by way of cheque, meaning thereby, in case of business necessity only the assessee has been incurring expenses by way of cash. - Since the vouchers form part of regular books of accounts maintained by the assessee, the same cannot be considered as additional evidences. - this issue may be put to rest by disallowing 5% of expenses incurred by way of cash exceeding ₹ 20,000/- Visit to Get Source Reopening of assessment u/s 147 - The assessment of the assessee for the year under consideration thus was reopened by the Assessing Officer after arriving at his own satisfaction by analysing and cross-verifying the information received by him and since the same is clearly evident from the reasons recorded by him, we are of the view that the reopening of assessment by the Assessing Officer is in accordance with law. Visit to Get Source TDS U/ 192 - secondment - reimbursement of salaries and allowance - addition u/s 40(a)(ia) - The assessee is directed to produce secondment agreement entered into by it with Brakes India Limited as well furnish complete details of nature of services rendered and functions performed by these employees, before the AO Visit to Get Source TDS u/s 194C - addition u/s 40(a)(ia) - assessee JV had assigned the work allotted to its member companies - payments made towards subcontract without deducting tds - there was no Profit and Loss Account in the assessee’s case and there was no claim of any expenditure - there was no question of any disallowance u/s 40(a)(ia) Visit to Get Source Addition u/s 68 - outstanding sundry creditors - the said sundry creditors were paid in the subsequent year through banking channels and that the assessee has had regular transactions with the same parties in the subsequent years which were not doubted by the Revenue - Addition deleted. Visit to Get Source Customs Advance Licence Scheme - it is absolutely no defence of the State authorities to contend that they were not aware of their own notification - The onus heavily rests on them and a casual statement generating litigation by State apathy cannot be approved. Visit to Get Source Levy of penalty u/s 114AA - The activity of the import of the prohibited goods by covering them with the help of some goods, which are declared and permitted under law, reflected the lack of bonafides on the part of the appellant and the three authorities have concurrently found against the appellant that there were imports made by the Assessee contrary to law. Visit to Get Source Classification of imported goods - Palm Kernel Acid Oil or Palm Kernel Fatty Acid - The appellant has produced the test report from the supplier of the goods which clearly indicated that the imported consignment is having the characteristics of Palm Kernel Acid Oil and not Palm Kernel Fatty Acid, as held by the Revenue based on the CRCL report Visit to Get Source Classification of goods - heavy melting scrap - the goods are required to be testing and inspection of the Bureau of Indian Standard and the same has not been done. In that circumstances, the classification arrived by the adjudicating authority is not acceptable, therefore, classification is declared by the appellant is accepted. Visit to Get Source Revocation of CHA license - imposition of penalty - the customs house agent/customs broker is required to verify the antecedent of importer and based on the existence of IFC code and documents submitted to the CHA and not the basis of physical verification of the premises of the appellant, IE Code required to be verified from the DGFT site and other related documents such as PAN number, service tax, sale tax registration etc. - There is no need for physical verification of the registered premises. Visit to Get Source Indian Laws Dishonor of cheque - rebuttal of presumption u/s 139 - If cash transaction of huge amount had been conducted by the appellant / complainant, strong burden is shifted upon him to show that he has received and provided the huge amount in legal way because before drawing the presumption, the appellant had to prove beyond doubt that he had transacted the money legally. Visit to Get Source Service Tax Jurisdiction - Validity of SCN issued demanding service tax, post GST - power to inquiry / investigate / audit - Having held the impugned Notification as being valid and applicable to the petitioner, this court declines to quash the impugned notice which only calls upon him to submit a reply for showing cause against the proposed action namely, the recovery of 'short payment' with interest/penalty - Writ Petition being devoid of merits, fails. Visit to Get Source Demand of service tax - commercial training or coaching - the appellant is running course, namely, Post Graduate Diploma in Liberal Studies is recognized by the State of Haryana which the regulatory body is authorizing the appellant to run the course and as per the report of expert of committee of UGC approved intake 200 whereas 197 is the current intake. - Benefit of exemption is available. Visit to Get Source Classification of services - fabrication of armoured vehicles - activity of bullet proofing - the appellant has correctly classified the activity under works contract service. No service tax is payable under the business auxiliary service Visit to Get Source SSI Exemption - branded service or not - the appellant is not providing any branded service as MSO is supplying signal to the appellants which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers. The appellants are not providing any branded service to the subscribers Visit to Get Source Central Excise Classification of goods - fabrication of armoured vehicles - the appellant is manufacturing special purpose light armoured vehicle meant for use by troops and merit classification under Chapter heading 8705 90 00 and entitled for the benefit of exemption N/N. 6/2006-CE - and no duty of excise is payable by the appellant on the said activity. Visit to Get Source VAT Central sales tax / CST - Branch transfer or inter-state sales - pre-concluded contract of sale - Merely because the sales made by the Agent are immediately on the succeeding day or dates or in the near future, it does not entitle the Revenue to draw any presumption of link between movement of goods to the sale conducted by the Agent in the Kerala as Branch of the Assessee Principal. Visit to Get Source Case Laws: GST 2020 (1) TMI 979 Exemption of Supply of Farm Labour - supplier of manpower - recipient of Supply of Farm Labour service is the sole owner of agriculture Land - documents/ evidence required to be kept as a supplier of manpower for availing exemption as Supply of Farm Labour - Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 09/2017 Integrated Tax (rate) dated 28.06.2017 - whether classifiable under SAC 99851? - Whether exemption of Supply of Farm Labour as provided in Notification No. 12/2017 and Notification No. 09/2017 Integrated Tax (rate) dated 28.06.2017 is available to supplier of manpower falling under SAC 99851? - HELD THAT:- The supply of manpower services falling under SAC 99851 is not exempted from GST under Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and Notification No 09/2017- Integrated Tax (Rate) dated 28.06.2017 as the said notification is available to supply of farm labour services falling under Chapter heading 9986 only. Is it necessary for recipient of Supply of Farm Labour service to be fully engaged in agriculture and not doing any other activity? - What type of documents/ evidence is required to be kept as a supplier of manpower for availing exemption as Supply of Farm Labour under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 09/2017 Integrated Tax (rate) dated 28.06.2017? - HELD THAT:- The questions are beyond the scope of this authority as defined under Section 97 (2) of GST Act, 2017 and therefore no advance ruling can be given on these questions. 2020 (1) TMI 978 Classification of goods - Rubber pad - classification if goods supplied in semi-finished condition to any person other than railways - applicable rate of GST - HELD THAT:- The Government has received representations that certain suppliers are making supplies to the railways of items classifiable under any chapter other than chapter 86, charging the GST rate of 5%. Accordingly a clarification regarding applicable GST rates on various supplies made to the Indian Railways has been issued by Government of India vide Circular No. 30/4/2018-GST dated 25.01.2018 - On perusal of said Circular, we observe that the Government has already clarified that only goods of chapter 86 of GST Tariff Act, 2017 will attract GST @ 5% if supplied to the Railways and goods falling in any other chapter of GST Tariff Act, 2017 will attract GST rate applicable to the such goods whether the same supplied to railways or otherwise. Thus, Rubber Pad falls under Chapter 4016 of the GST Tariff Act, 2017 and attract GST @ 18% [9% CGST + 9% SGST] as on date. 2020 (1) TMI 977 Classification of goods - Fried Fryums of different shapes, sizes and varieties which are ready to eat - applicable HSN code and GST rate - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids - Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption. Further, Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. Thus, the product Fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of issued under the CGST Act, 2017 and corresponding N/N. 1/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Service Tax rate of 18% is applicable to the product Fried Fryums as per Sl. No. 23 of Schedule III of N/N. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate) dated as amended, issued under the GGST Act, 2017 or IGST Act, 2017. 2020 (1) TMI 976 Maintainability of Advance Ruling application - Classification of GST - service provided in relation to on field testing for Bio Efficacy, Phyto-toxicity and other tests on plants for evaluation of insecticide - rate of GST - HELD THAT:- On perusal of letter dated 24.07.2019 of Deputy Commissioner (STF), Rudrapur, we find that the investigation against the applicant is being carried out on various services including testing of soil and other laboratories services and the said fact is also communicated by the Joint Commissioner, SGST, Rudrapur vide his letter dated 03.10-2019. Since the question raised in the application is pending with SGST Authorities under the provisions of this Act, therefore as per proviso to section 98(2) of the Act the said application filed by the applicant is hereby not admitted. 2020 (1) TMI 975 Exemption under N/N. 12/2017 - Government Authority or not - parking lot services provided by the Contractor appointed by the Market Committee - Whether the parking lot services provided by the Contractor appointed by the Market Committee, which is a Government Authority is exempt under Notification No. 12/2017 as the parking lot activity is covered under Article 243 of the Constitution? HELD THAT:- The other functions of the State including welfare activity of State could not be construed as sovereign exercise of power. Hence, every governmental function need not be sovereign . State activities are multifarious. From the primal sovereign power, which exclusively inalienably could be exercised by the Sovereign alone, which is not subject to challenge in any civil court to all the welfare activities, which would be undertaken by any private person. In the present case, although the Punjab State Agricultural Marketing Board was established on 26th May, 1961 under the Punjab Agricultural Produce Markets Act; 1961, its function cannot be considered as sovereign functions and accordingly the parking fees collected by them through the applicant does not acquire the nature of statutory fee so as to be outside the scope of any tax. Thus, the parking fees collected by the applicant are not in nature of statutory fees - thus, the parking lot services provided by the Contractor appointed by the Market Committee, are not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority as per the definition provided in the clause 2(zf) of the notes appended to N/N. 12/2017. The parking services provided by the Contractor appointed by the Market Committee, not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority - Marketing committee (Mandi Board) does not qualify under the definition as provided in clause 2(zf) of the notes appended to N/N. 12/2017 - The activity / services of parking provided by the applicant falls under heading 9967 and attracts GST@ 18%. 2020 (1) TMI 974 Constitutional validity of levy of IGST on Ocean Freight - Ultra Vires provisions - Reverse charge - Levy tax twice - once levy of customs duty on imported goods, second IGST on ocean freight - estimated component of the Ocean Freight paid for the transportation of the goods by the foreign seller - N/N. 8 of 2017-Integrated Tax (Rate) dated 28th June 2017 HELD THAT:- In the present case, the writ-applicant is importing goods on the CIF basis, i.e. the contract is for supply of goods delivered at the Indian port. Thus, the transportation of goods in a vessel is the obligation of the foreign exporter. The foreign exporter enters into contract with the shipping line for availing the services of transportation of goods in a vessel. The obligation to pay consideration is also of the foreign exporter. Thus, the writ-applicant could be said to have neither availed the services of transportation of goods in a vessel nor he is liable to pay the consideration of such service. Hence, the writ-applicant is not the 'recipient' of the transportation of goods in a vessel service as per Section 2(93) of the CGST Act. The principle of construction in tax statutes is that if the person sought to be taxed comes within the letter of the law he must be taxed. In a taxing Act one has to merely look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. In our opinion, the writ-applicant cannot be made liable to pay tax on some supposed theory that the importer is directly or indirectly recipient of the service. The term 'recipient' has to be read in the sense in which it has been defined under the Act. There is no room for any interference or logic in the tax laws. The impugned notifications levying tax on supply of service of transportation of goods by a person in a non-taxable territory to a person in a non-taxable territory from a place outside India upto the customs station of clearance in India and making the petitioner, i.e. the importer, liable for paying such tax, are ultra vires the provisions of the IGST Act. The supply of service of transportation of goods by a person in a non-taxable territory to another person in a non-taxable territory from a place outside India upto the customs station of clerance in India, is neither an inter-state supply nor an intra-state supply. Thus, no tax can be levied and collected from the writ-applicant. Scope of Import of services - Concept of place of supply - Held that:- Section 66B of the Finance Act, 1994, levied the service tax on the value of all services (other than those specified in the negative list). Further, Section 68(2) of the Finance Act, 1994, provided the power to the Central Government to specify the categories of services and also the person by whom the service tax shall be paid. Under the IGST Act, the integrated tax is leviable only on inter-state supplies made or agreed to be made. As stated above, the supply of services provided by a person in a non-taxable territory to a person in a non-taxable territory by way of transportation of goods in a vessel from a place outside India to the place of customs station of clearance in India is not an inter-state supply as per the provisions of Section 7 of the IGST Act. There is no doubt that in the taxing legislation, the legislature deserves the greater latitude and the greater play in joints. This principle, however, cannot be extended so as to validate a levy by a subordinate legislation which has no sanction of law, however, laudable may have been the object to introduce it. The legislature, while enacting the IGST Act, was aware of the wide provisions under the Finance Act, 1994, which provide the Government the power to collect tax under the reverse charge basis only from the recipient of the service but from any other person as may be prescribed. However, while enacting the IGST Act, the legislature consciously curtailed the power of the Government to collect tax under the reverse charge basis from any person and restricted it only to the recipient of the supply. Conclusion: No tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law. The impugned Notification No.8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N.10/2017 Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional - Application allowed. 2020 (1) TMI 973 Fundamental rights of citizens by authoritarianism - mute spectator or not - Powers of officers conducting search and seizure to remain stayed in the premises for unlimited period - Key person was not found at home during search - Gujarat GST Act - HELD THAT:- It is apparent that the officer who is armed with a search warrant is authorised to search the premises referred to in the warrant of authorisation and to seize goods, documents, articles or things, which are useful for or relevant to any proceedings under the GST Acts. The provisions nowhere arm the officer, in whose favour the authorisation is issued, to search for any person or to remain in the premises after the search is over, or to monitor what the persons residing in the premises are doing and to reside in the premises. In fact, no provision under the Code permits even the Investigating Officer to continuously stay inside the residential premises to apprehend an accused as and when he returns home. The powers vested in the officer armed with a search warrant are limited to searching the entire premises. Once the premises are searched, the search party would have to leave the premises and cannot wait there indefinitely for days on end under the expectation that the person whom they are searching for may return home or may contact his family members. In the facts of the present case, the authorised officer was authorised to search only the premises. The nature of the search conducted by him is discernible from the panchnama of the search proceedings drawn by the authorised officer in the presence of panchas, a copy whereof has been produced for the perusal of this court. In terms of the panchnama, on 11.10.2019, in the afternoon, the officers searched the residential premises of the petitioner; and the books of accounts and other documents which they found were brought to the main room, which included the bank pass-books and cheque books, etc. of the family members. On a perusal of the contents of the panchnama, it is evident that during the time the officers were present in the premises, the movements of the family members were restricted and they were required to take permission of the officers concerned if they had to go out of the house. The family members, including female members, have been interrogated even during night hours, and there is nothing in the panchnamas, to show the presence of any female officer during the night time. Moreover, on each day, in the morning shift and night shift, there were two different panchas from different localities residing in the premises and it also appears that an SRP constable was also present throughout. Thus, the family members of the petitioner were constrained to put up with different sets of strangers in their residential premises throughout the day and night for eight days - While it is an admitted position that the officers along with the panchas and the SRP constable were inside the residential premises during the course of the entire search, in the entire panchnama, there is no mention as to what the officers and panchas and SRP constable did inside the residential premises of the petitioner throughout the day, except for having recorded the statements of the family members of the petitioner at different times of the day. Nothing is stated as regards where the members of the search party stayed during the course of the day and where they slept at night. An action taken may be said to be in good faith if the officer is otherwise so empowered and he exceeds the scope of his authority. However, in a case like the present one where the authorisation was for search and seizure of goods liable to confiscation, documents, books or things and the concerned officer converted it into a search for a person and an investigation, which is not otherwise backed by any statutory provision, it may be difficult to accept that such action was in good faith. Protection of such action under section 157 of the GST Acts may unleash a regime of terror insofar as the taxable persons are concerned - It is clarified that this court does not condone any alleged illegal acts on the part of the petitioner and in case he has indulged in any illegalities, the law should take its own course. However, the court found it necessary to pass the present order to curb any further abuse of powers in this manner by the authorities under the GST Acts. Let the matter be listed for hearing on merits on 23.01.2020. Income Tax 2020 (1) TMI 972 Review petition - whether referring to guidelines issued by the CBDT in Instruction No.3/2003 the Tribunal was right in observing that by not making reference to the TPO, the AO had breached the mandatory instructions issued by the CBDT? - in this Review Petition it is urged that in view of Circular dated 08.08.2019, benefit ought to be extended in favour of the Review Petitioner as the tax effect in the matter is stated to be less than the limit prescribed in the Circular dated 08.08.2019 - HELD THAT:- Since the matter has been restored to the file of the Assessing Officer so that appropriate reference could be made to the Transfer Pricing Officer (TPO), at this stage the benefit of the aforesaid circular dated 08.08.2019 cannot be extended. Review Petition is dismissed. 2020 (1) TMI 971 Application for recall of an ex-parte order - Dismissal of appeal for non-prosecution - compounding the same by refusing to entertain the application for recall of the order - ITAT has dismissed the application for recall of its order solely on the ground of limitation, observing that it has no power to condone the delay - HELD THAT:- Tribunal lost sight of the main provision as enshrined in Rule 24 of the ITAT Rules, which required the ITAT to dispose of the appeal on merits after hearing the respondent. Since it did not proceed to do so, and specifically gave an option to seek recall of its order, we find no justification for dismissing the application for recall on the ground of limitation. Rule 24 of the ITAT Rules, as noted above, enjoined the ITAT to decide the appeal on merits. The appeal filed in 2014, had ripened for final disposal only in 2016 and therefore, dismissal of the appeal without deciding the merits of the case, merely on the ground for non-prosecution, was certainly unwarranted. High Court of Madras in the case of Smt. Ritha Sabapathy vs. DCIT, [ 2019 (4) TMI 625 - MADRAS HIGH COURT] has held that the ITAT cannot dismiss an appeal on account of non-appearance of party without giving finding on merits and remanded the matter to the ITAT. No attempt was made by the ITAT to ascertain the date of actual receipt of the order passed by the ITAT and the ITAT has proceeded to hold the application to be barred by limitation as provided under Section 254(2) of the Act. Section 254 (2) of the Act was amended by the Finance Act, 2016 with effect from 01.06.2016 and the words four years from the date of the order were substituted by six months from the end of the month in which the order was passed . The explanatory notes to the provisions of the Finance Act, 2016, do not throw much light for the purpose of the amendment, except for stating that the period of limitation has been shortened in order to bring certainty to the orders of the ITAT Relevant date for the purpose of commencement of period of limitation - The Supreme Court, in the case of D. Saibaba v. Bar Council of India [ 2003 (5) TMI 508 - SUPREME COURT] had an occasion to consider a similar question in the context of Advocates Act, 1961 for exercising the remedy to review/reference/appeal. In the said case, the expression used in the provision was sixty days from the date of that order . The Court noticed several other decisions, rendered under different acts and came to the conclusion that the expression the date of that order must be construed as meaning the date of the communication or knowledge, actual or constructive of the order sought to be reviewed. Starting point of limitation provided under Section 254 (2) of the Act has to commence from the date of the actual receipt of the judgment and order passed by the ITAT which is sought to be the reviewed. Pertinently, adjudication on the merits of the case by the ITAT is essential for this Court to hear an appeal and the ITAT could not have dismissed the same solely on account of non-appearance of a party. As a result, as of today, the petitioner company is faced with the situation where it cannot exercise its remedy of filing the statutory appeal under Section 260A of the Act, since order dated 18.10. 2016, dismissing the appeal of the appellant, does not adjudicate on the merits of the case. For the assessee to file an appeal under the said provision before this Court, it is required to satisfy that the case involves a substantial question of law. It was the duty and obligation of the ITAT to dispose of the appeal on merits after giving both the parties an opportunity of being heard. The ITAT should have been conscious of the fact that the appellant was not afforded the opportunity to argue the case on merits and for this reason it had given the liberty to apply afresh, while dismissing the appeal for non-prosecution. There was thus no cogent reason for the tribunal not to entertain the application for recall. The ITAT has ignored the decision of the Supreme Court in CIT vs. S.Chenniappa Mudaliar [ 1964 (4) TMI 138 - MADRAS HIGH COURT] in the correct perspective. Course adopted by the ITAT at the first instance, by dismissing the appeal for non-prosecution, and then compounding the same by refusing to entertain the application for recall of the order, cannot be sustained. We, therefore have no hesitation in quashing the impugned order. Accordingly, the present petition is allowed. The order dated 30.08.2019 is quashed and the matter is remanded back to the ITAT with a direction that they shall hear and dispose of appeal on merits 2020 (1) TMI 970 Extension of time for furnishing online Income Tax return in the Bihar which was expired on 31-03-2018 for the Financial Year-2016-17 - private cause OR public cause - HELD THAT:- The petition in its present form is not maintainable, apart from it being deficient of particular materials. However, Tax Payers of Bihar faces unnatural inconvenience in not filing income-tax returns within the stipulated period remains unexplained. The petition appears to be espousing private cause instead of public cause. 2020 (1) TMI 969 Enhanced deduction u/s 10A - Further deduction claimed u/s 10A in consonance with the APA Agreement entered by the assessee - Whether the assessee has satisfied the conditions of deduction u/s 10A - HELD THAT:- As decided in own case [ 2019 (12) TMI 153 - ITAT PUNE] proviso to section 92C(4) does not debar deduction u/s 10A on additional income in assessment u/s 92CD; assessment u/s 92CD provides for granting deduction u/s 10A; and the assessee has satisfied the requirement of section 10A(3) read with section 92CD(2), thereby entitling it to deduction u/s.10A on the additional amount. Thus direct the AO to grant deduction claimed in respect of the incremental invoicing pursuant to APA agreement for computing total income. Thus, the grounds of the assessee are allowed. 2020 (1) TMI 968 Disallowance u/s 37(1) - payments have been incurred by way of cash and hence genuineness of these expenses cannot be proved - AO made disallowance u/s 40A(3) of the Act protectively - HELD THAT:- In the instant case, the AO has, presumably, taken the view that these expenses have not been laid out or expended wholly and exclusively for the purpose of business. Accordingly, he has invoked the provisions of sec. 37 of the Act. There should not be any doubt that, merely because certain expenditure has been incurred by way of cash, the same cannot be considered as not related to the business activities of the assessee. Assessee has incurred 90% of expenses by way of cheque, meaning thereby, in case of business necessity only the assessee has been incurring expenses by way of cash. There is no doubt that the expenses incurred by way of cash may not be amenable for cross verification. But the vouchers scanned by Ld CIT(A) would show that the recipients have signed the vouchers. Since the vouchers form part of regular books of accounts maintained by the assessee, the same cannot be considered as additional evidences. Hence we are of the view that the Ld CIT(A) was not justified in treating them as additional evidences. In any case, he has examined the same and has also scanned three vouchers in his order, meaning thereby, he has admitted them, even though the same does not constitute additional evidence. From the assessment order, we notice that the assessing officer has not found fault with any of the vouchers, nor did he attempt to examine the recipients of cash paid towards expenses in order to verify the veracity of expenses. Hence we are of the view that the AO has disallowed the expenses on surmises only. There is merit in the submission of Ld D.R that the expenses incurred by way of cash is not amenable for cross verification. The Ld CIT(A) has also pointed out certain deficiencies in the manner of maintenance of vouchers. Accordingly, we are of the view that this issue may be put to rest by disallowing 5% of expenses incurred by way of cash exceeding ₹ 20,000/-, i.e., 5% of ₹ 1,11,32,697/- in order to take care of deficiencies, if any, in incurring expenses by way of cash maintenance of vouchers. We order accordingly. Accordingly, the order passed by Ld CIT(A) on this issue stands modified. Disallowance relating to Royalty payments made to the Government u/s 40A(3) - HELD THAT:- From the explanations and evidences furnished by the assessee, we notice that the provisions of sec.40A(3) are not attracted, since all the payments except two have been made by way of demand drafts only and not by way of cash. The two payments have also been stated as payment made to the Government in the treasury, which is covered by clause (b) of Rule 6DD. Since these are payments have been made to the Government, the genuineness of these expenses cannot be doubted with. There is one more reason for accepting the genuineness of expenses, i.e., The aggregate amount of royalty expenses claimed by the assessee is ₹ 2.58 crores, out of which the AO is doubting genuineness to the extent of ₹ 11.86 lakhs, that too only for the reason that they have been incurred by way of cash. However, we have seen that the assessee has either purchased demand drafts or remitted the amount into treasury. Hence we are of the view that the genuineness of these expenses cannot be doubted with. Accordingly, we set aside the order passed by Ld CIT(A) on this addition and direct the AO to delete the disallowance 2020 (1) TMI 967 Exemption u/s 11 - disallowance of amount utilized for acquisition of assets as application of income u/s 11 - disallowance of claim of repayment of loan as application of income u/s 11 - HELD THAT:- As submitted that the nexus of loan funds and utilization should be examined to find out exact position. Accordingly, the Ld Counsels submitted that the assessee may be provided with an opportunity to furnish the details of utilization of loans, so that the correct amount of application of income could be quantified in terms of the ratio laid down in the above said decision. D.R also agreed to the plea put forth by the Ld counsels for the assessees. Accordingly, we set aside the orders passed by Ld CIT(A) in respect of above said two issues in all the years and restore them to the file of the AO with the direction to examine these issues afresh in the light of above said decision of the Tribunal by duly considering the information provided by the assessee with regard to utilization of loan funds. The assessee should be provided with adequate opportunity of being heard. Rejection of claim of carry forward of current year s deficit (excess amount of application of income) to subsequent years and also claim of depreciation on assets - HELD THAT:- The issue of carry forward of deficit amount is consequential to the earlier two issues. Since the assessing officer has disallowed claim of application of income in respect of assets purchase out of loan funds and also repayment of loans, the income came to be assessed in positive figure. Hence there was no requirement of holding that the deficit shall be carried forward. Since the earlier two issues have been restored to the file of the assessing officer, this issue shall be dependent upon the result of the consequential order that may be passed by the AO. Accordingly, this issue is also restored to his file with the direction to allow carry forward of deficit, if any, computed in any of the years. The AO is also directed to allow claim of depreciation after examining the same upto assessment year 2014-15, since the provisions of sec.11(6) debars claim of depreciation on the assets, which have been allowed as application of income. Manner of computation of income u/s 11and carry forward of excess amount of application - HELD THAT:- Both the parties agreed that the issues urged by the revenue are covered against the revenue by the decision rendered by Hon'ble Supreme Court in the case of CIT vs. Rajasthan Gujarati Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] . Accordingly, we dismiss the grounds urged by the revenue in all the three years. 2020 (1) TMI 966 Chargeability to tax of long term capital gains - sale of land to assessee's husband which was not disclosed by assessee in return of income filed with Revenue - HELD THAT:- Assessee has brought on record documents such as Vardhamanam Deed, Settlement Deed and affidavit to contend that this entire sale was sham with a view to bring on record market value of said land so that compensation from Government at market value can be claimed. The guideline value of the said property is also higher as against compensation awarded by Government for compulsory acquisition of assessee property being 40.5 cents of land , as we have detailed above . The assessee has filed petition with District Collector for enhanced compensation. The details are elaborated in preceding para of this order. Certain additional evidences are also brought on record by assessee for the first time before tribunal which are even post appellate order passed by learned CIT(A) viz. registered settlement deed dated 12.05.2014 executed by her husband settling this property in favour of assessee. The affidavit is also filed contending that the entire sale transaction of sale of 25 cents of land to husband was sham transaction. These documents including additional evidences filed before tribunal including fresh contentions made by assessee before tribunal for the first time , need verification by authorities as these are fact finding exercise which requires investigation of facts to unravel truth Assessee deserves one more opportunity and the matter need to be remitted back to the file of the AO for fresh framing of assessment denovo after considering all the explanations/evidences filed by the assessee in its defense including customary law applicable to assessee and her husband which has attained force of law and is not in conflict with specific provisions of 1961 Act and investigation of facts. We clarify that it is the assessee who is contending that sale transaction executed by her through registered sale deed in favour of her husband is a sham transaction , and thus the onus is on the assessee to prove that it was a sham transaction and it is for the assessee to rebut the presumption that transfer was complete when registered sale deed was executed by assessee and possession handed over to husband of the assessee , by cogent evidence in de novo assessment proceedings before AO. The AO shall allow assessee to file evidences/explanations in her defense in set aside assessment proceedings which shall be admitted by the AO in the interest of substantial justice and then the issue be adjudicated on merits in accordance with law. Needless to say that the AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in denovo assessment proceedings - Appeal filed by assessee allowed for statistical purposes. 2020 (1) TMI 965 Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly. 2020 (1) TMI 964 Reopening of assessment u/s 147 - long-term capital had escaped assessment - tangible material - HELD THAT:- Specific information received by the Assessing Officer, which constituted tangible material, was analysed, verified and cross-checked by the Assessing Officer and after such analysis and cross verification, a belief was formed by him that this substantial long-term capital gain chargeable to tax in the hands of the assessee for the year under consideration had escaped assessment. He accordingly recorded the reasons giving the details of specific information received by him, analysis and inquiries made by him to cross verify the said information and findings of fact arrived at on the basis of such analysis and cross-verification, which ultimately formed the basis or reason to believe that the income of the assessee in the form of long-term capital had escaped assessment for the year under consideration. In our opinion, the tangible material coming to his possession thus was properly and adequately analysed and cross verified by the Assessing Officer and after arriving at the satisfaction by applying his mind to the relevant facts of the case as emerging from the analysis and cross verification of the tangible material, a belief was formed by the Assessing Officer about the escapement of income of the assessee from the assessment for the year under consideration. The assessment of the assessee for the year under consideration thus was reopened by the Assessing Officer after arriving at his own satisfaction by analysing and cross-verifying the information received by him and since the same is clearly evident from the reasons recorded by him, we are of the view that the reopening of assessment by the Assessing Officer is in accordance with law and there is no legal infirmity as alleged on behalf of the assessee. We, therefore, find no merit in the case of the assessee on this issue and reject the same - Decided against assessee. 2020 (1) TMI 963 Unexplained cash deposits - CIT-A estimated the income @4% on total turnover - Estimation of income - turnover of the assessee in purchase and sale of digital dollars - HELD THAT:- There is no provision in the Income Tax Act to tax the unutilized balance received from the customers. If the assessee fails to provide the digital dollars, it would remain as liability and the assessee is obliged to return the money to the depositor. Therefore, the same cannot be treated as income of the assessee. AO also did not invoke any provision of the Act to tax the difference amount. During the course of survey conducted in the case of 133A also, no evidence was found by the AO to hold that the assessee has acquired the assets equivalent to the difference amount taxed by the AO as observed by the Ld.CIT(A). Therefore, we hold that the amount of ₹ 1,87,45,260/- is turnover of the assessee for purchase and sale of digital dollars and income is to be estimated on the turnover. Accordingly, we hold that ₹ 1,87,45,360/- represent the turnover of the assessee in purchase and sale of digital dollars. Addition relating to the deposits made in various accounts - we observe that there were sufficient amount of cash withdrawals from the bank accounts for making deposits in different persons. Therefore, we do not see any reason to suspect the source of deposit when there were sufficient withdrawals in the bank account. Accordingly, we hold that having accepted by the AO that the assessee had purchased the dollars from different persons to the extent of ₹ 46,37,000/- out of total deposits of ₹ 1,87,45,260/-, there is no reason to suspect the source of deposits made in the different persons of the bank accounts. Hence, we uphold the order of the Ld.CIT(A). CIT(A) has estimated the turnover at ₹ 2,50,00,000/- and estimated the income @4%. The assessee in his statement recorded u/s 133A as well as in the return of income admitted the income @2%. The Ld.CIT(A) has not given any basis for estimating the turnover at ₹ 2,50,00,000/- when the turnover works out to sum of ₹ 2,32,82,260/-. Out of 2,33,82,260/-, A sum of ₹ 15,00,000/- was given as loan to Sri Andhavarapu Srinivasa Rao as discussed in page No.17 of the assessment order. Total turnover of the assessee works out to ₹ 2,33,82,260/- but not ₹ 2,50,00,000/- as held by the Ld.CIT(A). Accordingly, we set aside the order of the Ld.CIT(A) and direct the AO to estimate the income at 2% on total turnover of ₹ 2,33,82,260/- and dismiss the appeal of the revenue. 2020 (1) TMI 962 Penalty u/s 271AAB - No undisclosed income found - HELD THAT:- When the Revenue has failed to explain any undisclosed income as per the statutory definition and affirm the CIT(A) s findings deleting the impugned penalty(ies). Revenue fails in its sole substantive grievance 2020 (1) TMI 961 Disallowance u/s 36(1)(iii) out of interest payment on the ground that borrowed funds has not been utilised for business purpose - contention of the assessee is that the amount was not given in the year under consideration - HELD THAT:- Question of genuineness, creditworthiness and business expediency is to be verified in the year when this advance was given. Contention that if genuineness, creditworthiness and business expediency is not proved in that year, in that event, the A.O. would be at liberty to make addition in this year as relying on ACIT Vs. Auto Light (India) Ltd [ 2016 (7) TMI 1557 - ITAT JAIPUR] merits acceptance. This Tribunal in the case of ACIT Vs. Auto Light (India) Ltd. (supra), has observed that assessee was required to prove whether on the date of making investment or giving the interest free amount to the sister concern, the assessee was having sufficient interest free funds available with it. For that purpose, the assessee should demonstrate from its cash flow statement and bank account that it has date-wise availability of interest free funds on the date of making advances to the sister concern. What is provided u/s 36 of the Act the deduction on the amount of interest paid on the capital borrowed for the purpose of business or profession, the provision is made applicable on the capital borrowed and has not restricted to the capital borrowed during the year. Therefore, the Tribunal did not accept the contention that restricting disallowance only for the amount borrowed during the assessment year. Therefore, in the light of above, we hereby set aside the assessment order and restore the assessment to the file of the A.O. on this issue for deciding it afresh after verifying whether on the date of making advance or giving the interest free amount to the sister concern, the assessee was having sufficient interest free funds available with it and also whether such amount was given out of any business expediency. In case the A.O. finds that there was no business expediency or availability of interest free funds when the advances were given, he would be free to sustain the impugned addition. Difference in the interest as disclosed by the assessee accrued on FDR and as reflected in form 26AS - HELD THAT:- Considering the contention of the assessee that the fixed deposit was matured in the first quarter of financial year 2012-13 relevant to assessment year 2013-14, the A.O. would verify the interest related to the year under consideration and decide this ground afresh - Appeal filed by the assessee is allowed for statistical purposes. 2020 (1) TMI 960 Allowability of interest expenses on trade advances u/s 36(1) - whether interest on borrowed capital for the purpose of construction of building can be disallowed on interest accrued only upto the date of completion of building or put to use of building to capitalize the same? - HELD THAT:- AO has not doubted the genuineness of the capital expenditure incurred by assessee nor there is any doubt about payment of interest on these trade advances by assessee to Brakes India Limited It is observed from audited financial statements placed before the Bench that assessee is also claiming depreciation on building. As carefully perused audited financial statement of the assessee and we could not find that there was any diversion of funds by assessee for non business purposes nor it is the case of the AO that diversion of funds for non business purposes has taken place. Merely because trade advances were utilized for construction of factory building could not be a reason to disallow interest expenses once the said asset is put to use for business purposes, which is the mandate of Section 36(1)(iii) of the 1961 Act read with proviso to Section 36(1)(iii) of the 1961 Act. The Revenue has not filed any evidences to demolish the findings of learned CIT(A) in its well reasoned order and merely bald grounds/averments are raised which has no legs to stand. CIT(A) has passed well reasoned order on this issue and there is no reason for us to interfere with said well reasoned appellate order passed by learned CIT(A) on this issue of allowability of interest expenses on trade advances. Allow interest expenses on trade advances as business deduction while computing income of the assessee and dismiss appeal filed by Revenue on this issue TDS U/ 192 - secondment charges paid by assessee to M/s.Brakes India Ltd.by way of reimbursement of salaries and allowance of employees of Brakes India Limited deputed with assessee - addition u/s 40(a)(ia) - HELD THAT:- We have observed that assessee has not placed on record secondment agreement entered into by it with Brakes India Limited and its terms and conditions for deputing these employees of Brakes India Limited were not analysed by authorities below. We have also observed that authorities below have also not analyzed the nature of services rendered and functions performed by these employees who were deputed by Brakes India Limited with assessee. Under these circumstances, we are inclined to set aside and restore this issue back to the file of the AO for detailed analysis of terms and conditions of secondment agreements and also of various services and functions performed by employees who were deputed with assessee, keeping in view ratio of decision of Hon ble Delhi High Court in the case of M/s.Centrica India Offshore (P.) Ltd. [ 2014 (5) TMI 154 - DELHI HIGH COURT] and CIT v. M/s.Emerson Process Management (India) Pvt. Ltd. [ 2014 (6) TMI 1037 - BOMBAY HIGH COURT] The assessee is directed to produce secondment agreement entered into by it with Brakes India Limited as well furnish complete details of nature of services rendered and functions performed by these employees, before the AO in set aside denovo assessment proceedings. Needless to say that AO shall provide adequate opportunity of being heard to assessee in de novo assessment proceedings in accordance with principles of natural justice in accordance with law in denovo assessment proceedings and explanations/ evidences filed by assessee in denovo assessment proceedings shall be admitted by AO in the interest of justice. During denovo assessment proceedings, the AO shall also consider the applicability of decision of Hon ble Delhi High Court in the case of CIT v. Ansal Land Mark Township Private Limited [ 2015 (9) TMI 79 - DELHI HIGH COURT] , against which SLP has been admitted by Hon ble Supreme Court [ 2016 (8) TMI 1281 - SC ORDER] - Ground filed by Revenue is allowed for statistical purposes 2020 (1) TMI 959 Exemption u/s 11 - Anonymous donation - assessee accommodating such donations received as fees - HELD THAT:- In this case, the seized material for the assessment year 2013-14 gives an impression that the amount was collected from the students. However, it is not known that such donations were collected from students or any other party who are related to the students at the time of admission. These facts were not examined either by the Assessing Officer or by the CIT(A). Even though there was no prohibition for receiving voluntary donations from the general public, collecting capitation fee for admission of the students in any educational institution is prohibited and it is a punishable offence under the State Enactment. The assessee claims that necessary materials were filed before the Assessing Officer to establish the identity of the donors and also the confirmation letters. In this situation, this Tribunal is of the considered opinion that this matter needs to be re-examined by the AO. Accordingly, the orders of both the authorities below are set aside and the entire issue raised by the assessee including voluntary donations, anonymous donations and salary advance said to be received from the staff, etc., are remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter and bring on record the nexus between the donations and the donors in respect of each donation and there after decide the issue afresh Penalty U/s.271(1)(c) - Unexplained cash deposits - HELD THAT:- Assessee has disclosed the entire receipt of donations. However the Assessing Officer found that it is not a voluntary donation but anonymous donation. The fact that the assessee has disclosed the entire donation and claimed exemption U/s.11 of the Act is not in dispute. When the assessee has disclosed the entire receipt and the expenditure and claimed the same as exempted U/s.11 of the Act, merely because the assessee could not furnish the details of the persons from whom the donations was received, cannot be a reason for concluding that the assessee concealed any part of income or furnished inaccurate particulars. Making a statutory claim U/s.11 of the Act cannot be construed as furnishing inaccurate particulars. In the case of CIT Vs. M/s. Reliance Petro Products Pvt. Ltd., [ 2010 (3) TMI 80 - SUPREME COURT] assessee claimed certain amount as expenditure, however the Assessing Officer disallowed the claim of the assessee and also levied penalty. The Apex Court found that when the assessee claims certain amount as expenditure, merely because the assessee could not furnish the entire details, it cannot be said that there was concealment of income or furnishing inaccurate particulars - mere claim of exemption U/s.11 of the Act, in respect of the so called donations received by the assessee cannot be a reason for levy of penalty U/s.271(1)(c) of the Act. In view of the above discussions, we are unable to uphold the orders of the lower authorities. Accordingly the same is set aside and the penalty levied u/s.271(1)(c) is deleted. - Decided in favour of assessee. 2020 (1) TMI 958 Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly. 2020 (1) TMI 957 Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly. 2020 (1) TMI 956 TDS u/s 194C - addition u/s 40(a)(ia) - payments made towards subcontract without deducting tds - assessee JV had assigned the work allotted to its member companies - HELD THAT:- As decided in own case [ 2017 (8) TMI 1595 - ITAT PUNE] in absence of any contract or sub-contract work by joint venture to its member companies, provisions of section 194C were not applicable for the purpose of TDS - The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective shares and TDS apportionment certificates were also issued by the AO every year for these eight years including the current assessment year to enable them to claim the same - there was no Profit and Loss Account in the assessee s case and there was no claim of any expenditure - there was no question of any disallowance under the provisions of section 40(a)(ia) - disallowance u/s. 40(a)(ia) made by the AO cannot be sustained - the finding of the CIT(A) cannot be interfered who has rightly held that there is no question of disallowance made u/s. 40(a)(ia) of the Act Decided against revenue. 2020 (1) TMI 955 Addition u/s 68 - addition being the amount outstanding in the name of the three sundry creditors - HELD THAT:- Since the assessee in the instant case, has filed the various details giving the statement of account, confirmation, etc., and has substantiated that the said sundry creditors were paid in the subsequent year through banking channels and that the assessee has had regular transactions with the same parties in the subsequent years which were not doubted by the Revenue and considering the fact that the trading results shown by the assessee for the impugned year have not been disturbed by the AO, therefore, in the light of the above discussion and relying on the decisions cited (supra), we hold that the addition made by the AO u/s 68 of the Act in respect of the three sundry creditors which has been sustained by the CIT(A) is not justified. We accordingly set aside the order of the CIT(A) and direct the AO to delete the addition. The grounds raised by the assessee are allowed. 2020 (1) TMI 954 Disallowance of labour expenses - CIT (A) confirmed disallowance to the extent of 25% instead of 50% disallowed by AO - HELD THAT:- CIT(A) has stated that assessee has also produced bills in respect of most of the discrepancies and the gross profit of the assessee firm has tremendously gone up from 4.89% to 14.01% in the earlier years. CIT(A) has held that many discrepancies noted by the assessing officer were explained by the assessee during the course of appellate proceedings but many have not been explained. Therefore, the ld. CIT(A) has restricted he disallowance to the extent of ₹ 25% to the amount of ₹ 37,28,270/-. In the light of the findings of the ld. CIT(A) and considering the there was tremendous jump in the gross profit from 4.89% to 14.01% in the year, we consider it will be reasonable to restrict the disallowance to the extent of 12.5% to meet the end of justice for want of verification on account of not providing proper supporting bill/vouchers. Therefore, addition to the extent of ₹ 18,64,135/- is confirmed. This ground of appeal is partly allowed. Disallowance of salary expenses - HELD THAT:- The assessee has only furnished the copies of ledger account but failed to demonstrate with relevant evidences, the nature of work done by the employees, copies of bank statement reflecting the payment made and other relevant evidences that the aforesaid employees have employed with assessee. Therefore, we do not find any reason to interfere in the finding of ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed. Disallowance of supervision charges - assessee has failed to substantiate the incurring of such expenses with relevant evidences - HELD THAT:- It is noticed that assessee has claimed that such supervision charges paid to Shri Gaurang Patel, however, the assessee has failed to prove the genuineness of incurring of such expenditure with relevant supporting documentary evidences about the nature of work performed by him and details of payment etc., therefore, we do not find any reason to interfere in the finding of ld. CIT(A). Accordingly, this ground of appeal of assessee is dismissed. Addition by treating advance booking as unexplained credit - Identity and creditworthiness of the parties and the genuineness of the transaction were not proved - HELD THAT:- The assessing officer has not made any inquiry/verification from the aforesaid parties to contradict the claim of the assessee that amount was received as booking amount. In the light of the above facts and circumstances, we consider that decision of ld. CIT(A) is not justified. Therefore, this ground of appeal of the assessee is allowed. Disallowance on account of unexplained expenditure - assessee has failed to substantiate the genuineness of such payment with any relevant supporting evidences - HELD THAT:- It is observed that before the lower authorities, the assessee has not submitted any evidences, detail and nature of expenditure incurred, therefore, the claim of the assessee was disallowed. Even during the course of appellate proceedings before us, the assessee has failed to furnish any relevant supporting evidences to demonstrate that the aforesaid expenditure was incurred for the purpose of business, therefore, we do not find any merit in this ground of appeal of the assessee and the same is dismissed. Disallowance on account unexplained expenditure - HELD THAT:- Assessee has not furnished any relevant supporting evidences to substantiate that differences in the purchases was assessed on account of groping change in account. Further at the level of CIT(A) the assessee has failed to meet reconciliation in the aforesaid difference detected by the assessing officer. Even during the course of appellate proceedings before us, the assessee has failed to furnish supporting evidences to demonstrate that the differences in the purchase was arsied on account of grouping change in account. Therefore, we do not find any reason to interfere in the finding of ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed. Disallowance as remuneration paid to partner Dashrathbhai S. Chaudhary, HUF - HELD THAT:- As relying on P. GAUTAM CO. [ 2011 (8) TMI 750 - ITAT AHMEDABAD] and HEMTEJ IMPRINT, 4, NARAYAN CHAMBER'S [ 2010 (7) TMI 1100 - ITAT AHMEDABAD] claim of remuneration paid to the partners as representative of HUF were allowed. 2020 (1) TMI 953 Disallowance of interest expenses u/s 36(1)(iii) - interest expenses incurred by the assessee on the borrowed money utilized for the acquisition of the machineries - HELD THAT:- Admittedly, there was the acquisition of the new machinery out of the borrowed fund which was not put to use during the year under consideration. But the question arises whether such acquisition of machinery amounts to the extension of the existing business. None of the authorities below has put some light on this aspect. As such the proviso to section 36(1)(iii) of the Act mandates to capitalize the amount of interest on the machine acquired out of the borrowed fund provided such acquisition results in the extension of the business Value of the machine acquired by the assessee during the year is negligible to the total value of the plant and machineries shown by the assessee in its balance-sheet as on 31 March 2011. Such, small addition in the plant and machinery cannot amount to the extension of the existing business. As there is no detail available before us suggesting that there was some increase in the production/sales etc, we are not inclined to treat the interest expense on the acquisition of such machinery out of the borrowed fund as extension of the existing business. Accordingly we hold that as there was no extension of the existing business, therefore the amount of interest expenses incurred by the assessee on the borrowed money utilized for the acquisition of the machineries is eligible for deduction as revenue expense. Hence the ground of Appeal of the assessee is allowed. Disallowance u/s 14A - HELD THAT:- It is presumed that the investment has been made by the assessee out of its own fund without utilizing the borrowed money. Accordingly there cannot be any disallowance on account of interest expense. In holding so we find support and guidance from the judgment of CIT Vs.UTI Bank ltd. [ 2013 (8) TMI 238 - GUJARAT HIGH COURT] wherein it was held no disallowance of interest expenses is warranted if the own fund of the assessee exceeds the amount of investment. Regarding the addition of administrative expenses, the Ld. AR did not advance any argument at the time of hearing considering the smallness amount involved therein. Accordingly, we do not find any reason to interfere in the finding of the Ld. CIT-A. Accordingly we confirm the disallowance of ₹ 12,807.00 on account of administrative expenses. Hence the ground of appeal of the assessee is partly allowed. Disallowance of books profit under section 115JB for addition u/s 14A - HELD THAT:- Disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - HELD THAT:- there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income under the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the condition that the disallowance shall not exceed the amount of disallowance determined by the authorities below under the provisions of section 14A r.w.r. 8D of Income Tax Rules. Hence, the ground of appeal of the assessee is partly allowed. Addition on account of interest on the income tax refund - assessee before us agreed for the addition of the impugned amount of interest on the income tax refund but requested to give a direction to delete the same from the income of the subsequent assessment year provided such interest has been offered to tax - HELD THAT:- DR has not brought anything on record contrary to the argument advanced for the assessee. The scheme of Act prohibits taxing the same income twice. Thus if such amount of interest income has already been offered to tax by the assessee in any of the assessment year, then the same shall stand deleted. Accordingly we set aside the file to the AO with the direction to adjudicate the issue afresh as per the provisions of law and in the light of the above stated discussion. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 2020 (1) TMI 952 Disallowance u/s 14A - disallowance based on computation mechanism provided under Rule 8D(2)(iii) - Disallowance of indirect expenses vis- -vis Rule 8D(2) (iii) of the rules - HELD THAT:- Issue which has to be decided by us also is only with regard to disallowance made under Rule 8D(2)(iii) of the rules for which purpose, the availability of own funds with the assessee company has got no relevance, hence, the argument made by the ld. AR in that regard and reliance placed by him on certain decisions need not be adjudicated at all. We find that a Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] had held that only those investments which had yielded exempt income should be considered for the purpose of working out the disallowance under rule 8D(2) of the rules. Accordingly, we direct the ld. AO to recompute the disallowance under rule 8D(2)(iii) of the rules by considering only those investments which had actually yielded exempt income and reduce a sum of ₹ 3.02 Crores which had already been disallowed by the assessee in the return of income towards administrative expenses. Accordingly, the ground No.1 of original grounds and additional grounds 1 2 raised by the assessee and ground No.1 of revenue are partly allowed. Disallowance u/s.40(a)(ia) - Non deduction of TDS on provisions of interest made at the end of the year - HELD THAT:- As decided in own case for A.Y.2008-09 regular return bonds being transferable on simple endorsement and delivery and the relevant registration date being a date subsequent to the closure of books of account, the assessee could not have ascertained the payees at the point of time when the provision for interest accrued but not due was made. Accordingly, no tax was required to be deducted at source in respect of the provision for interest payable made by the assessee which reflected provision for 'interest accrued but not due' in a situation where the ultimate recipient of such 'interest accrued but not due' could not have ascertained at the point of time when the provision is made - In the case under consideration, the assessee had made provisions but had not received the bills, that in the subsequent year the provisions made by it were offered for taxation. We decide ground no.2 in favour of the assessee Disallowance on provision made for leave salary / compensated absence as per actuarial valuation - HELD THAT:- Hon ble Calcutta High Court in the case of Exide Industries Ltd. vs Union of India [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] had struck down the provisions of Section 43B Clause (f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon ble Supreme Court in the subsequent order had not stayed the judgement of Hon ble Calcutta High Court. We find that the Hon ble Supreme Court [ 2009 (5) TMI 894 - SC ORDER] had passed an interim order giving the aforesaid observations. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO to pass orders based on the outcome of the main appeal on merits by the Hon ble Supreme Court as stated supra. Accordingly, the ground No.3 of original grounds of appeal raised by the assessee is allowed for statistical purposes. Claim of Deduction u/s.80IA vis- -vis allocation of head office expenses - HELD THAT:- We find that this issue is already covered in favour of the assessee by the orders of this Tribunal from A.Y₹ 2003-04 to 2008-09. We also find that for A.Y.2006-07, the revenue had carried this matter to the Hon ble Jurisdictional High Court and the Hon ble Jurisdictional High Court in Income Tax Appeal [ 2018 (1) TMI 1558 - BOMBAY HIGH COURT] had held that the question raised by the revenue does not give raise to any substantial question of law and accordingly, did not entertain the same Disallowance of Additional Depreciation on assets acquired and put to use for less than 180 days in the earlier assessment year - HELD THAT:- We find that there is absolutely no dispute that assets were acquired and put to use by the assessee in the earlier assessment years for less than 180 days. The assessee had claimed the remaining portion of additional depreciation in the year under consideration. We find that this issue has already been held in favour of the assessee by the decision of the Hon ble Jurisdictional High Court in the case of PCIT vs. Godrej Industries Ltd. [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] Treatment of expenditure incurred towards corporate advertisement as capital in nature and allowing depreciation thereon - HELD THAT:- We find that there is no dispute that assessee company had incurred an expenditure on corporate advertisements to maintain its corporate image which in turn resulted in increased sale of products of the assessee. The assessee claimed the same as revenue expenditure where as the ld. AO treated the same as brand building expenditure and accordingly considered it as capital in nature and granted depreciation. This action was upheld by the ld. CIT(A). We find that the reliance placed by the ld. AR on the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Asian Paints India Ltd. [ 2016 (11) TMI 258 - BOMBAY HIGH COURT] on the impugned issue squarely addresses the dispute in favour of the assessee. Expenses incurred for making advertisement films - treated as a capital or revenue expenditure - HELD THAT:- What is to be examined is the nature of advantage obtained in the commercial sense by incurring the expenditure. If the expenditure consists of merely facilitating the assessee to carry on business more profitably leaving the fixed capital untouched, it would be on revenue account. The entire expenditure, the Court observed, has to be looked at from a businessman's point of view. In the present facts, the expenditure on account of corporate advertisement is to essentially maintain the corporate image and not create a corporate image. Further, the impugned order holds on facts that the corporate advertisement expenditure facilitates the business having a direct impact on sales and profitability of the Respondent-Assessee. The view taken by the impugned order that corporate advertisement enhances the business of the Assessee resulting in increased sales of its product in Revenue field, is a possible view, on the present facts Claim of deduction towards the education cess and secondary and higher education cess - HELD THAT:- Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. vs. JCIT [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] had taken into account the CBDT Circular dated 18/05/1967 for holding such education cess, secondary and higher education cess to be allowable as deduction. Their Lordships had held that Section 40a(ii) of the Act applies only on taxes other than cess. Claim of depreciation on Goodwill allowed Receipt on account of sale of certified emission as capital receipt (Carbon Credit receipts) - Revenue or capital reciept - HELD THAT:- We find that the Hon ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] , Subhash Kabini Power Corporation Ltd [ 2016 (5) TMI 793 - KARNATAKA HIGH COURT] held that Carbon Credit receipts are to be construed as capital receipts. When this was put to the ld. DR, the ld. DR fairly conceded that this issue is covered in favour of the assessee by various High Courts, but he however, prayed for verification of these figures by the ld. AO. The ld. AR also fairly agreed that verification of the figures by the ld. AO be made. Accordingly, we deem it fit and appropriate, to set aside this issue to the file of the ld. AO, to verify the actual figures of carbon credit receipts and decide the taxability of the same in the light of the aforesaid decisions of the Hon ble High Courts Customs 2020 (1) TMI 951 Advance Licence Scheme - clearance of the consignment free of import duty in terms of Customs N/Ns. 203/1992, 204/1992, both dated 19.05.1992 - HELD THAT:- The order of the High Court is completely unsustainable. The entire consignment was imported under one advance licence issued to the petitioner prior to 19.05.1992. The fortuitous circumstance that part of the consignment was actually imported prior to 25.11.1993 and the rest subsequent thereto is hardly relevant in view of the clarificatory notification dated 18.03.1994 that the exemption would continue to apply subject to fulfilment of the specified terms and conditions. It is not the case of the respondents that the consignments imported subsequently did not meet the terms and conditions of the exemption. It is unfortunate that the High Court failed to follow its own orders in a similar matter. The High Court further gravely erred in holding that the authorities of the State were also unaware of the clarificatory notification and neither did the appellant bring it on record. The State is the largest litigant as often noted. It stands in a category apart having a solemn and constitutional duty to assist the court in dispensation of justice. The State cannot behave like a private litigant and rely on abstract theories of the burden of proof. The State acts through its officer who are given powers in trust. If the trust so reposed is betrayed, whether by casualness or negligence, will the State still be liable for such misdemeanor by its officers betraying the trust so reposed in them or will the officers be individually answerable - it is absolutely no defence of the State authorities to contend that they were not aware of their own notification dated 18.09.1994. The onus heavily rests on them and a casual statement generating litigation by State apathy cannot be approved. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 950 Waiver of penalty u/s 114AA of CA - reduction in the quantum of penalty imposed u/s 112(a) of CA - abetment of the smuggling activities - maintainability of appeal - HELD THAT:- As a matter of fact, no question of law arises from the order of the learned Tribunal, much less substantial question of law, which is the requirement for maintaining the appeal under Section 130 of the Act. The matter relates to imposition, deletion or reduction of the amount of penalty are within the discretion of the fact finding bodies and the learned Tribunal being the highest fact finding body, in its fair exercise of discretion, has reduced the penalty under Section 112(a) of the Act while setting aside the penalty under Section 114AA of the Act. The activity of the import of the prohibited goods by covering them with the help of some goods, which are declared and permitted under law, reflected the lack of bonafides on the part of the appellant and the three authorities have concurrently found against the appellant that there were imports made by the Assessee contrary to law. We cannot re-examine the findings of facts at this stage under Section 130 of the Act and as far as the question of penalty is concerned as stated above, the reduction of penalty under Section 112(a) of the Act from ₹ 10,00,000/- was rather a lenient approach taken by the Tribunal and the same does not require any interference by this Court - Appeal dismissed. 2020 (1) TMI 949 Imposition of penalty on CHA u/s 112(1)/(b) of the Customs Act - misdeclaration of quantum of imported goods - Synthetic Diamond Powder - allegation that the valuation of Synthetic Diamond Powder is based on the unit of carats , thus by declaring less number of carats, the importer had declared only 1/5th of the quantity and thus undervalued the consignment to the extent of 80% of the quantity declared in the aforesaid two Bills of Entry. HELD THAT:- There is no allegation of any connivance on the part of the appellant-CHA with the importer. Further, in the statement recorded the appellant-CHA have stated that it was mistake on his part but he was not knowing about the no. of carats in 1 Kg., but the Bs/E were filed as per Carats shown in Invoices and same were appraised by the group as such and he never questioned about this. The appellant had not committed any act of omission or commission rendering the goods liable to confiscation and consequently no penalty is attracted under Section 112(a)/(b) of the Act - appeal allowed - decided in favor of appellant. 2020 (1) TMI 948 Classification of imported goods - whether the Palm Kernel Acid Oil or Palm Kernel Fatty Acid - challenge to valuation adopted by the adjudicating authority for the imported consignment - re-test of sample denied - HELD THAT:- There is considerable force in the submission made by the learned Advocate regarding denial of the re-test of the product imported - also, the test report has not indicated the various chemical parameters prescribed for the test of the imported goods in terms of fatty acid contents moisture and impurities and iodine and saponification value. The appellant has produced the test report from the supplier of the goods which clearly indicated that the imported consignment is having the characteristics of Palm Kernel Acid Oil and not Palm Kernel Fatty Acid, as held by the Revenue based on the CRCL report - Further, the value obtained from the Mumbai port regarding import price, which has been applied for the imported consignment is for Palm Kernel Fatty Acid distillate and cannot be applied in the present case. The impugned order is not sustainable on account of findings in the case of PUNJAB STAINLESS STEEL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, KANDLA [ 2000 (8) TMI 141 - CEGAT, NEW DELHI] and M/S OC CROCHETS PVT. LTD. VERSUS CCE-DELHI-III [ 2019 (5) TMI 809 - CESTAT CHANDIGARH] as the re-test of the sample has been denied to the appellant. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 947 Confiscation - imposition of redemption fine and penalty - classification of goods - heavy melting scrap - legality of reports of the Chartered Engineers for change of classification - Whether the Chartered Engineer report is acceptable in the facts and circumstances of the case or not? - HELD THAT:- The Chartered Engineer who has examined the goods are not metallurgical engineer and the reports were based on visual examination without any market inquiry, therefore, the reports provided by the Chartered Engineers are not acceptable - as Chartered Engineers who were not metallurgical engineer and given the reports without market survey on visual examination cannot be relied upon. Therefore, the reports given by the Chartered Engineers are not acceptable for assessment of the bills of entry in question. Whether the classification of the impugned goods has been done by the adjudicating authority correctly or not in the absence of any test report? - HELD THAT:- Admittedly, as per the steel and steel products (quality control) second order 2012, the goods are required to be testing and inspection of the Bureau of Indian Standard and the same has not been done. In that circumstances, the classification arrived by the adjudicating authority is not acceptable, therefore, classification is declared by the appellant is accepted. Whether the goods are required to be mutilated as directed by the adjudicating authority? - HELD THAT:- As the reports of the Chartered Engineers are not acceptable and the goods declared by the appellant as scrap has been accepted. In that circumstances, the goods are none other than the scrap as declared by the appellant, therefore, the same are not required to be mutilated - in the absence of any rules framed for mutilation, the mutilation of the said goods cannot be allowed. Whether in the facts and circumstances of the case redemption fine and penalty can be imposed on the appellant or not? - HELD THAT:- Admittedly, the declaration made by the appellant has been accepted. Moreover, the goods were not mis- declared and held to be scrap. In that circumstances, the redemption fine and penalty imposed on the appellant are set aside. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 946 Revocation of CHA license - imposition of penalty - it was alleged that the appellant was having the knowledge about the imported consignment to be mis-declared with respect to its description and value - section 11E of CBLR, 2013 - HELD THAT:- The charge against the appellant is that they have not personally verified the existence of the importer and also failed to properly verify IFC Code and the actual person behind this import. Not only that, the appellant has got the two similar consignments in past. The SCN issued to the appellant does not explain as to which of the specific provisions of Section 11E has been violated by the appellant. However, in the SCN it is mentioned that the appellant failed in its duty of customs broker by not advising his client to comply with the provision of the Customs Act and to verify antecedent of importer/exporter and IFC code no., identify his client and there at the declared address by using reliable, independent, authentic document, data information. It is on record that the appellant has obtained all the records required for the verification of KYC documents of M/s Kamal imports at the time of import of their first consignment and on receipt of KYC documents, the appellant has also conducted verification of the address of the importer from KYC details and which was found to be in existence at their declared premises. As per Regulation 11 of the CBLR, 2013 there is no requirement of physical verification of registered premises of importer. The verification is only required to be done on the basis of documents which was done by the appellant, and is not disputed. An identical issue has also been dealt with by Hon ble Delhi High Court in case of COMMISSIONER OF CUSTOMS VERSUS HIM LOGISTICS PVT. LTD. [ 2017 (1) TMI 747 - DELHI HIGH COURT] , where it is held that the CHA required to verify KYC norm, as per the documents submitted to them only. Thus, the customs house agent/customs broker is required to verify the antecedent of importer and based on the existence of IFC code and documents submitted to the CHA and not the basis of physical verification of the premises of the appellant, IE Code required to be verified from the DGFT site and other related documents such as PAN number, service tax, sale tax registration etc. There is no need for physical verification of the registered premises of the appellant for purpose of verification of KYC norm. Accordingly, the appellant has not failed in its duty casted upon him under the CBLR, 2013 as a customs broker. Appeal allowed - decided in favor of appellant. PMLA 2020 (1) TMI 945 Attachment of property - property which was rented out for ₹ 65,000/- has been vacated by the tenant and the refundable security deposit of ₹ 3,00,000/- was adjusted against the last four months rent. The date of vacation has not been mentioned nor has the period against which the security deposit has been adjusted been revealed - notice issued under Section 8(4) of the PMLA - HELD THAT:- The property was rented out on the basis of unregistered rent agreement. Admittedly Mrs. Poonguzhali, appellant is the owner of the aforesaid property. She had executed the unregistered rent agreement on 01.04.2017. According to the said agreement, she was getting ₹ 65,000/- as rent per month from the tenant. She has not filed any affidavit though an affidavit has been filed by another appellant namely Mr. P.K.M. Selvam, who is her husband and appellant stating that the tenant has vacated the aforesaid property. The affidavit does not say as when the property has been vacated. The affidavit also does not reveal as to when the daughter of the appellant has shifted. No proof has been provided regarding the posting of the husband of the appellant s daughter at Chennai. However, it is clear from the pleadings of the non-petitioner/appellant that the rental value of the aforesaid property is ₹ 65,000/- per month. This fact was not revealed by the appellants when the matter was heard by this Tribunal on 19.06.2017, even though the property at serial no.(ii) was given on rent w.e.f. 01.04.2017. In the light of the admission of the rental value of the said property per month, without prejudice, the appellant Smt. Poonguzhali is directed to deposit a sum of ₹ 65,000/- per month with the respondent w.e.f. the date of confirmation of Provisional Attachment Order as user and occupation charges after deducting the amount already paid in terms of the interim order dated 19.06.2017. The appellant Smt. Poonguzhali is allowed eight weeks time to pay the arrears from the date of confirmation order. The current and future rents shall be deposited by the appellant Smt. Poonguzhali before 7th of next month - Subject to above, the respondent shall not take any coercive action in view of the notice issued on 09.06.2017 under Section 8(4) of PMLA, 2002. Application allowed. Service Tax 2020 (1) TMI 944 Jurisdiction - appointment and jurisdiction of Central Excise Officers post GST - Validity of SCN issued demanding service tax post GST - power to inquiry / investigate / audit - Repealing of Chapter V of Finance Act of 1994 - Vires of Notification dated 09.06.2017 - Rule 3 of the Central Excise Rules, 2002 - recovery of short paid money alongwith interest and penalty - HELD THAT:- Perusal of Rule 3 in general and Sub Rule (2) of the said Rule in particular makes it clear that the Board in its discretion can specify the jurisdictional limits of the Excise Officers, for the purpose of the Act and the Rules promulgated thereunder; this apart, Sub Rule (3) is structured in such a way that any Central Excise Officer may exercise the powers vested in his sub-ordinate officer; the impugned Notification thus needs to be interpreted in the light of sec.2(b) of the Act r/w Rule 3 of the 2002 Rules; in terms of the impugned Notification, the territorial jurisdiction of Bengaluru South Commissionerate is vested in the Commissioner of Central Excise and Service Tax, Audit-I, Commissionerate, Bengaluru, as rightly contended by the Panel Counsel for the Revenue. The reliance by the counsel for the petitioner on the decision in AIR INDIA VERSUS UNION OF INDIA AND ORS. [ 1995 (7) TMI 425 - SUPREME COURT] , does not come to his aid; the Apex Court banking upon Benian on Statutory Interpretation, 2nd Edition, held that if a subordinate legislation is to survive the repeal of its parent statue, the repealing statute must say it in so many words and by mentioning the title of the subordinate legislation; there is no quarrel with this proposition at all; the question is with its invocability when the Central GST Act, 2017 which repeals the Acts in question makes a saving provision that too by naming them, in so many words; it has been a settled principle of law of precedent that a decision is an authority for what it actually lays down, and not for what all logically follows from what is laid down therefore, much milk cannot be derived by placing reliance on the said ruling. Having held the impugned Notification as being valid and applicable to the petitioner, this court declines to quash the impugned notice which only calls upon him to submit a reply for showing cause against the proposed action namely, the recovery of 'short payment' with interest/penalty Once a decision is taken by the authority after considering the cause shown by the noticee, writ jurisdiction may become invocable, subject to all just exceptions; therefore, this court declines to examine the validity and sustainability of the impugned Show Cause Notice. This Writ Petition being devoid of merits, fails - decided against petitioner. 2020 (1) TMI 943 Demand of service tax - fees charged from students for the Post Graduate Diploma in Liberal Studies - course conducted by the University - whether covered under the scope of the expression education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force or not? - benefit of exemption from service tax in terms of Sr.No.9(a) of Notification No.25/12-ST dt.20.6.2012 or not - extended period of limitation - penalty. HELD THAT:- The private university shall commence enrolment of students for such course or programme of study and shall give authorization to the university to start the course or programme. The private university shall not commence first enrolment of student without specific authorization of the Government. In no case, the application for authorization be kept beyond 120 days, whereafter it shall be deemed to have the concurrence of the Government to start the course or programme of study. The appellant in compliance to the said provisions has obtained authorization from the State Government on 14.7.2014 - the appellant is running the course, namely, Post Graduate in Liberal Studies is a course authorised by the Government of Haryana which is the regulatory body of the appellant. Admittedly, section 22 (3) of the UGC Act clearly states that UGC is not having power to specify the list of diploma, as admitted by the Ld.AR in his written submission. Further, in answer to frequently asked question, it has been clarified by UGC that: Diploma/certificate courses are not specified by UGC. However, universities can run the diploma / certificate courses and with due approval of its governing councils/statutory council wherever required . Admittedly, in this case, the appellant has got necessary approval to run the said course. Therefore, the allegation made in the show cause notice is not sustainable as the appellant is not running the course which are not recognised by any law. Thus, the appellant is running course, namely, Post Graduate Diploma in Liberal Studies is recognized by the State of Haryana which the regulatory body is authorizing the appellant to run the course and as per the report of expert of committee of UGC approved intake 200 whereas 197 is the current intake. Therefore, the appellant is entitled for the benefit of exemption Notification No.25/12-ST dt.20.6.2012. 2020 (1) TMI 942 Classification of goods - fabrication of armoured vehicles - classification of services - activity of bullet proofing - Business Auxiliary Service or under works contract service? - demand of service tax on renting of immobile property service - benefit of N/N. 6/2006- CE dt. 1.3.2006. Classification of goods - fabrication armoured vehicles - HELD THAT:- The appellant is fabricating the motor vehicles which are having been used for protection against AK-47, splinter proof protection, bullet proof glass, retaliation through holes made on the side, rear and on top of the vehicle. These features made them special purpose light armoured vehicles meant for use by the police and provide protection to the troops sitting inside the vehicles against bullets/hand grenades - similar issue decided in the case of M/S. JCBL LIMITED, M/S. TATA MOTORS LIMITED, M/S. JCL LIMITED VERSUS CCE ST, CHANDIGARH-II [ 2019 (4) TMI 176 - CESTAT CHANDIGARH] where it was held that the main purpose is to ensure the safety of the occupants inside the vehicle for which, the vehicle is made bulletproof. Therefore, the bulletproof SPVs deserve to be classified under chapter heading 8705 - As the goods are classifiable under chapter heading 8705 90 00. Therefore, the appellants are entitled for the benefit under Serial No.50 of exemption N/N. 6/03-CE dt.1.3.2003 - thus, the appellant is manufacturing special purpose light armoured vehicle meant for use by troops and merit classification under Chapter heading 8705 90 00 and entitled for the benefit of exemption N/N. 6/2006-CE dt.1.3.2006 and no duty is payable by the appellant on the said activity. Classification of services - activity of bullet proofing - whether classifiable under works contract or business auxiliary service? - HELD THAT:- It is fact on record that that the appellant is providing the said service along with material as material is used for bullet proofing on which the VAT has been paid by the appellant. In that circumstance, relying upon the decision of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] wherein the Apex Court has held that the services supplied along with material, the same merit classification under works contract service, therefore, the appellant has correctly classified the activity under works contract service. No service tax is payable under the business auxiliary service - Therefore, the demand is also set aside under the category of business auxiliary service. Renting of immovable property service - demand of service tax - HELD THAT:- During the period from March and August, 2008, the service tax was payable on receipt basis. Admittedly, from the record, it is clear that the appellant has not received any amount on account of renting of immovable property, therefore, no service tax is payable by the appellant. Penalty - HELD THAT:- The whole of the demand against the appellant is not sustainable and the same is set aside - Consequently, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 941 SSI Exemption - branded service or not - N/N. 6/2005-ST dated 1.03.2005 - Cable operator service - appellants were not paying service tax on the ground that they are not liable to pay service tax and did not get some registered with the department - Extended period of limitation - service tax on the gross value of the services or otherwise - CENVAT credit of service tax paid by the MSO. HELD THAT:- The issue is decided in the case of MS BLUE STAR COMMUNICATION, MS EK ONKAR DIGITAL SERVICES, MS SHARMA CABLE, MS EK ONKAR ENTERPRISES, MS SHIVA CABLE VERSUS C.C.E. S.T. -LUDHIANA [ 2019 (2) TMI 1385 - CESTAT CHANDIGARH ] where it was held that the appellant is not providing any branded service as MSO is supplying signal to the appellants which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers. The appellants are not providing any branded service to the subscribers therefore, the appellants are entitled to avail the benefit of exemption N/N. 6/2005-ST dated 01.03.2005 and N/N. 33/2012-ST dated 20.06.2012. Thus, the appellant is entitled for exemption under Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012 - the extended period of limitation is not invokable. Consequently, no penalty is imposable on the appellant - the appellant is liable to pay service tax on the gross value of services received by them and is entitled to avail cenvat credit of service tax paid on the amount remitted to the MSO. The adjudicating authority shall quantify the demand for the period within the period of limitation on production of data of services provided by the appellant of cable services to the subscribers within the 30 days of receipt of this order on which the appellant shall paid the service tax, if payable. Appeal allowed by way of remand. Central Excise 2020 (1) TMI 940 CENVAT credit - input services - outward transportation of finished goods from the factory to the buyer s/customer premises - place of removal - scope of SCN - principles of natural justice - HELD THAT:- The Notice proceeds on the basis that the alleged irregular credit of ₹ 32,86,580/- pertains entirely in respect of service tax paid on outward transportation of finished goods from the factory to the buyer s premises. However, the OIA has accepted that the Cenvat credit involved on this score is confined to ₹ 3,26,055/- only and that rest of the disputed credit relates to four other issues. The break-up of the disputed credit involved in each of these issues are duly supported by a certificate dated 7 February 2018 from an independent Chartered Accountant and the same has not been disputed in the OIA - Therefore, there is considerable force in the contention of the Appellant that the denial of credit in respect of the other four issues was clearly beyond the scope of the Notice, which lays the foundation for any proceeding and an altogether new case could not have been made out at the appellate stage being violative of the principles of natural justice. Cenvat credit of service tax paid on outward transportation from the factory to the buyer s premises - HELD THAT:- The issue involved is clearly an interpretational one and the Board Circular dated 8 June 2018 also acknowledges the same - The period involved in the present proceeding is also prior to the contrary interpretation rendered in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] denying such credit - credit is allowed. Extended period of limitation - penalty - HELD THAT:- It cannot be said that the department was not aware of the factum of the Appellant taking Cenvat credit of service tax on outward transportation of finished goods to buyer s premises having served a Notice dated 25 June 2008 for the prior period. Therefore, the extended period is clearly not available to the revenue - Consequently, invocation of the extended period and the imposition of penalty under Section 11AC is set aside - The demand on this aspect has to be confined to the normal period of limitation alone. Denial of credit on invoices addressed to the Head Office - HELD THAT:- Such invoices were addressed to Waldies Division and given that the Appellant had only one factory in the Waldies Division , denial of such credit is unjustifiable by following the decision rendered in PAREKH PLAST (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [ 2011 (6) TMI 595 - CESTAT, AHMEDABAD] - In so far as the ISD invoices are concerned, such invoices clearly reflected that the credit was being distributed to the Waldies Division and therefore non reflection of the factory address is only a curable procedural defect not warranting denial of the substantive benefit of cenvat credit. Appeal allowed in part. CST, VAT & Sales Tax 2020 (1) TMI 939 Central sales tax / CST - branch transfers or inter-state sales? - HELD THAT:- The findings of facts, even though giving rise to the mixed question of facts and law as to inter-state sales or branch transfers, but such question of law does not arise in the facts of the present case. The correct findings of fact has been arrived at by the learned Tribunal based on the relevant documents and evidence, which they have analyzed in detail and came to the conclusion that branch transfers cannot be subjected to tax treating those transfers as inter-state sales as per the relevant provisions of the Central Sales Tax Act 1956. Petition dismissed - decided against Revenue. 2020 (1) TMI 938 Central sales tax / CST - Branch transfer or inter-state sales - pre-concluded contract of sale executed with the Agent in Kerala - Central Sales Tax Act - HELD THAT:- There are no merit in the submission made by the learned counsel for the Revenue that any pre- existing contract was established by the Revenue to tax the Branch transfers made by the Assessee Principal from the State of Tamil Nadu to the State of Kerala to its Agent M/s. Pandian Agencies. Merely because the sales made by the Agent are immediately on the succeeding day or dates or in the near future, it does not entitle the Revenue to draw any presumption of link between movement of goods to the sale conducted by the Agent in the Kerala as Branch of the Assessee Principal. The essential ingredient of Inter State Sale viz., movement of goods commencing from one State to another in pursuance of the pre-existing contract is not satisfied in the present case also. The concurrent findings of the two Appellate Authorities in favour of the Asessee do not call for any interference by this Court in the Writ jurisdiction. Petition dismissed - decided against Revenue. 2020 (1) TMI 937 Taxability - freight charges - Reassessment of tax payable - Chhattisgarh Vanijyik Kar Adhiniyam, 1994 - whether the freight charges do not form part of the sale price defined under section 2(u) of the Act, 1994? - change of opinion. Whether the freight charges do not form part of the sale price defined under section 2(u) of the Act, 1994 and hence not taxable? - HELD THAT:- It is clear point blank that the sale was to be completed only on effecting the door delivery in the premises of the purchaser/BSP and that the payment of consideration was to be based on the weight taken at the premises of the purchaser and never before. As such, the freight paid/agreed to be paid was to form part of the sale price defined under section 2(u) of the Act, 1994 and in turn, it will have a bearing in the turnover defined under section 2(w) of the Act, 1994. Whether mere change of opinion of the assessing officer is not a ground to initiate reassessment proceedings in terms of section 28 of the Act, 1994? - HELD THAT:- The nature of contentions raised by the appellants/assessees in these cases. It is stated that all the materials were very much available with the adjudicating authority at the time of original assessment itself and that there was no instance of any suppression or non-disclosure of the full materials necessary for the assessment by virtue of which no reassessment proceeding could have been initiated, pursued or finalized by the adjudicating officer. However, based on the observation that the question still would be whether, in the present case, the Assessing Authority was satisfied or not, a decision was rendered as contained in paragraphs 30 and 31 holding that it was not so, and hence decided against the Revenue. When all any tax is to be paid on the freight charges as well, by virtue of the specific terms agreed between the appellants/suppliers/ dealers and the respondent-Bhilai Steel Plant (BSP)/buyer, it has to be shifted to the shoulders by the respondent-BSP or not? - HELD THAT:- The question whether freight was forming part of the sale price was never subjected, considered or any opinion was expressed in this regard by the adjudicating officer in the first round of the proceedings. This escape of assessment was found by the Audit Department, which was taken as a piece of information by the adjudicating officer, who on application of mind, held that there was reason to believe that it had escaped assessment ; in turn leading to the proceedings under section 28 of the Act, 1994. Thus, the order passed by the adjudicating officer, which has become final, based on the interference declined by the statutory authorities. Appeal dismissed. Indian Laws 2020 (1) TMI 936 Promotion under Time Bound Promotion Scheme (TBPS) - superannuated respondent - pay scale and designation of a Section Officer with effect from 05.03.1993 - pay scale and designation of an Executive Officer with effect from 05.03.2002 - direction to pay arrears of salary and emoluments to the respondent, as revised for the aforesaid scales from time to time - HELD THAT:- It is required to be noted that the dispute is with respect to the promotion under the TBPS. An employee is entitled to the promotion under the TBPS only in accordance with the scheme and the promotion to the next higher post is provided under the TBPS. It is to be noted that, in the present case, the terms and conditions of the service of the employees of the appellant ICAI were governed by the settlements/agreements arrived at from time to time between ICAI and its Employees Association. The first settlement/agreement was arrived at on 10.01.1984 which, inter alia, provided for Time bound promotions/change to the next grade for its Class III and Class IV employees. It provided that if any LDC had already completed five years in the pay scale of ₹ 260400 he is to be placed in the pays cale of UDC Steno Typist i.e. ₹ 330560 and so on. Under Clause 1(v) of the said settlement/agreement, it was specifically provided that in respect of cases not falling under the two broad categories i.e. Clause III and Class IV, the decision was to be taken by the President of ICAI. This included the cases of Jamadar, Driver and Electrician. The employees of ICAI were governed by the memorandum of settlement dated 10.1.1984 so far as the timebound promotion is concerned and the subsequent settlements dated 02.08.1988 and 15.06.1991 were in continuation of the same. No new rights of promotion under the TBPS were conferred under the memorandum of settlements dated 02.08.1988 and 15.06.1991. The impugned judgment and order passed by Division Bench of the High Court directing the appellant to promote the respondent to the post of Assistant and thereafter to the post of Section Officer under the TBPS as per the memorandum of settlements dated 02.08.1988 and 15.06.1991 cannot be sustained and the same deserves to be quashed and set aside. Appeal allowed - decided in favor of appellant. 2020 (1) TMI 935 Dishonor of cheque - rebuttal of presumption u/s 139 - offence u/s 138 of Negotiable Instruments Act - acquittal of accused - rebuttal of presumption - legally enforceable debt or not - cross-examination of respondent - HELD THAT:- After perusal of the whole statement of all the witnesses, it reveals that it has not been denied by the respondent before the trial Court that Ex.P/1, questioned cheque, has not been issued by him. He pleaded the defence only that he has falsely been implicated in this false case. Learned trial Court also not found that cheque (Ex.P/1) has not been issued by the respondent in favour of the appellant. Learned trial Court only concluded the fact that the cheque had not been issued for legally enforceable debt after considering so many case-laws - On the basis of evidence adduced by both the parties, this Court is of the view that the appellant succeeded to prove that the cheque (Ex.P/1) had been issued by the respondent in favour of the appellant. Whether questioned cheque had been issued for satisfying the legally recoverable debt or liabilities? - HELD THAT:- Hon ble Apex Court in P. VENUGOPAL VERSUS MADAN P. SARATHI [ 2008 (10) TMI 598 - SUPREME COURT] held that presumption can be rebutted on the basis of the evidence adduced by both parties and can be rebutted on the basis of preponderance of probabilities. This Court is of the view that Man Singh being a Government Servant not informed to the employer as also not mentioning this amount in the income tax return nor made entries in the accounts book of the shop that his wife is running and also did not disclose the name of persons from whom he collected the money nor submitted any transaction in writing exhibited for borrowing money not diposed that the huge amount of money received by cheque from his relatives in his account. If cash transaction of huge amount had been conducted by the appellant, strong burden is shifted upon him to show that he has received and provided the huge amount in legal way because before drawing the presumption, the appellant had to prove beyond doubt that he had transacted the money legally. On the basis of evidence came into the deposition of complainant Man Singh (PW-1), this Court is of the view that on the basis of facts came in the cross-examination of complainant, the complainant failed to prove that he had provided a legal debt to the respondent - On the basis of preponderance of probabilities, the respondent succeeded to establish the fact that he had not provided check for payment a legally enforceable debt - In these circumstances, cheque issued to the appellant is not for satisfied the payment of legally enforceable debt or liability. The respondent succeeds to rebut the presumption under Section 139 of N.I. Act. There should be legally enforceable debt between the parties and this Court is of the view that when complainant failed to prove these ingredients, no offence is made out against the respondent for the offence punishable under Section 138 of N.I. Act. This Court is not inclined to allow this appeal filed by the appellant/complainant against the order of acquittal passed by the trial Court - appeal dismissed. 2020 (1) TMI 934 Dishonor of Cheque - insufficiency of funds - original postal receipt along with the written envelope misplaced - HELD THAT:- The Court should be liberal at the time of granting the permission of adducing the secondary evidence. If it is found that the refusal of aforesaid permission would collapse the entire case of the complainant, then the Court should permit the production of secondary evidence - In the present case, the complainant has filed the complaint under section 138 of the Negotiable Instruments Act. It is mandatory requirement for the aforesaid offence that after receiving the information of dishonour of cheque, notice should be given to the accused for demanding the money. If the accused did not pay the aforesaid money within 15 days from the date of receiving the notice, the complainant may file the complaint. If the postal receipt is proved, then it may be presumed that the notice has been served subject to condition that the service report has not been received within 30 days from the sending of the aforesaid article. Therefore, postal receipt is necessary to prove the sending of notice to the accused. It is also appeared from the record that the accused did not pay any amount to the complainant even after filing the complaint and after receiving the notice of complaint. Therefore, proof of refusal of notice is a mere formality. In view of this Court the revisional Court did not commit any mistake by granting the permission to adduce the secondary evidence of postal receipt and the envelope. Both documents are the important documents and may help the complainant to prove his case. Opportunity of disproving is also available with the petitioners and the right of petitioners has already been protected by the revisional Court - impugned order upheld - petition dismissed.
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