Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 28, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
Indian Laws
News
Highlights / Catch Notes
GST
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Whether the Compensation to States Act, 2017 is beyond the legislative competence of Parliament? - Refund of amount of compensation cess paid under the impugned legislation - There are no merit in the review petition and the same is accordingly dismissed.
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Classification of services - ‘Ancillary Services’ provided to various passenger/ tourist on behalf of main tour operators - The Applicant does not charge for the accommodation and transportation services as the same is not provided by the Applicant. - The services provided by the applicant are not Tour Operator Service’ but Support Services - liable to GST @18%
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Classification of goods - Fortified Rice Kernels (FRK) - the normal rice has undergone specific mechanical and chemical processing resulting in to FRK. This preparation/ process of FRK is way beyond the scope mandated under Chapter 10 of GST Tariff (i.e. husked, milled, polished, glazed, parboiled or broken).
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Pure labour contract services - For construction of a civil structure or any other original works under PMAY - The exemption entry does not speak of contractor or sub-contractor but supply of pure services by way of construction under certain projects.
Income Tax
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Settlement Application u/s 245C(1) - assessee disclosed additional income during the course of settlement - fresh and substantial disclosure or not - it is far greater than the initial disclosure - the Commission was right in considering the revised offer made by the assessee during the course of the proceedings in the nature of spirit of settlement.
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Additions towards unaccounted Cash u/s 69A - The explanation of the assessee that cash was retained by him in capacity of the Director of the Company cannot be doubted particularly when this fact was verifiable from the record of Registrar of Companies. - Additions deleted.
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Prior period expenses - The expenditure is not to be disallowed merely because it related to earlier previous year. In short under mercantile system of accounting the liability is allowable in the year it crystallized.
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Condonation of delay - delay of 1971 days - intimation u/s.200A - Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned
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Levy of FBT 115WE or TDS liability u/s 192 - it is not open for it to take a contrarian stand, as it apparently does inasmuch as it admits to neither – the tax liability on the benefit to its’ employees and, consequently, to deduction of tax at source and the consequential liability u/s. 201(1)/201(1A), as well as to tax u/s. 115WA(1).
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Rectification of mistake - levy of penalty u/s 271(1)(c) - when, the quantum appeal is pending before the lower authorities, disposing of penalty appeal on the same issues on which penalty has been levied would constitute a mistake apparent on record.
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Bogus purchases - CIT- A estimated profit from Hawala purchases by disallowing only 12.5% of the bogus purchases - Anyhow, on seeing the facts and circumstances, it seems quite justifiable to restrict the addition to the extent of 12.5% of the bogus purchase.
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Refund claim u/s 119 (2) (b) - condonation of delay - the land in question would be categorized as a capital asset. Therefore, the assessee cannot claim the benefit of exemption to “agricultural land” and hence, the compensation received by the assessee in pursuance of land acquisition proceedings, is subject to tax and the refund has been rightly rejected, as being barred by limitation.
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Disallowances u/s 40(a)(ia) - it becomes clear that it is a case of short deduction of tax and not a case of non deduction of tax. - no disallowance u/s 40(a)(ia) can be made for short deduction of TDS.
Customs
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Failure to fulfill post import conditions - import of various parts of Aircraft - Excesses stock - import without following the procedure - though these goods are liable for confiscation, but were never seized and released provisionally to the appellants against Bond and Bank Guarantee. - while upholding the demand of duty, the order of confiscation of goods and redemption fine imposed set aside.
Indian Laws
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The expression “reasonable grounds” means something more than prima facie grounds. It contemplates substantial probable causes for believing that the accused is not guilty of the alleged offence. The reasonable belief contemplated in the provision requires existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence
Central Excise
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CENVAT Credit - input services - the appellants received and consumed the service while they were participating in the development of technology by supervising and monitoring the same - There are no merit in the argument of the revenue that the services provided by SPIL was not used by the appellant and were exported as such.
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Benefit in the “Arrears Category” of SAB KA VISHWAS (LEGACY DISPUTE RESOLUTION) Scheme 2019 (svldrs scheme) - Revenue directed to consider the claim of the petitioner that, if the petitioners’ claim cannot be considered under the Arrears Category, they should be permitted to avail the benefit under any other Category into which their case is fit.
Case Laws:
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GST
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2020 (1) TMI 1007
Pure labour contract services - For construction of a civil structure or any other original works under PMAY - Applicability of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 - classification and HSN for services provided by the applicant - HELD THAT:- The scope of above said entry is not person-centric but project-centric. The entry does not speak of contractor or sub-contractor but supply of pure services by way of construction under certain projects. It clearly stipulates that whosoever is supplying the pure labour contract services for the construction of a civil structure or any other original works under PMAY is exempted from GST. The services of pure labour contract supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works under PMAY is exempted from GST vide Entry 10 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended).
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2020 (1) TMI 1006
Classification of goods - Fortified Rice Kernels (FRK) - whether fall under Chapter-10, Tariff item 1006 as Rice and description of goods 10061090 others (IGST Nil/ 5%, CGST Nil/2.5%, SGST Nil/2.5%)? - HELD THAT:- The applicant is a manufacturer and supplier of Fortified Rice Kernel (hereinafter called as FRK). The applicant supplies FRK to various units which are engaged in mixing of the FRK in normal rice which is further supplied to government for use in schemes such as Mid-Day Meal, Poshan Abhiyan, ICDS, PDS etc. - first, source rice for FRK is converted to flour form, then, the premix of vitamin-mineral is added to it. Post mix, the prepared material is passed through a machine which converts it back in to granule form of rice, which are known as Fortified Rice Kernel(FRK). The FRK is packed in a 25Kg bag to be further supplied to various millers/ suppliers with instruction this product should be first mixed (blended) with traditional rice in ratio of 1:100 and then the mixed rice is cooked and consumed. In the present case, the normal rice has undergone specific mechanical and chemical processing resulting in to FRK. This preparation/ process of FRK is way beyond the scope mandated under Chapter 10 of GST Tariff (i.e. husked, milled, polished, glazed, parboiled or broken). Therefore, though FRK is shaped in form of rice by the mechanized process but it is not rice grain in terms of Chapter 10. Thus, FRK is classifiable under HSN 19049000 of GST Tariff as other and attracts GST @ 18%.
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2020 (1) TMI 1005
Classification of services - Ancillary Services provided to various passenger/ tourist on behalf of main tour operators - the Applicant receives service orders from the main tour operator to provide a range of services to the passenger/ tourist. - whether the said service falls under Chapter heading 9985 (i) {Supply of Tour Operator Service) or 9985 (iii) {Support Services}? - applicable rate of tax. HELD THAT:- A gross amount should be charged by the Tour Operator for the entire Tour. In present case, the services provided by the Applicant has various activities like Elephant/ Camel ride, Boat ride, Guide services, local sightseeing, dinner/ lunch at local restaurant etc. For each such service no separate invoice is issued to the tourist and one consolidated bill is raised by the Applicant to the tour operator. The Applicant does not charge for the accommodation and transportation services as the same is not provided by the Applicant. Thus, the applicant does not satisfy the conditions for tour operator and services provided by the applicant cannot be treated as Tour Operator Services in terms of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. The services provided by the supplier are not in the nature of services provided by Tour Operator, the said supply of services cannot be classified under SAC 9985(i) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. The services provided by the applicant are not Tour Operator Service but Support Services classifiable under Serial No. 23 [(SAC 9985(iii)] of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and attracts GST @ 18%.
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2020 (1) TMI 1004
Permission for withdrawal of Advance Ruling application - Input tax credit - goods and services used in construction of hotel will be available to the applicant engaged in providing taxable services of hotel accommodation and related services - HELD THAT:- The applicant has requested for withdrawal of the advance ruling application vide their letter dated 22.11.2019. Accordingly, no advance ruling is given.
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2020 (1) TMI 1003
Whether the Compensation to States Act, 2017 is beyond the legislative competence of Parliament? - Refund of amount of compensation cess paid under the impugned legislation - HELD THAT:- There are no merit in the review petition and the same is accordingly dismissed.
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2020 (1) TMI 1000
Cancellation of registration certificate granted to the 2nd respondent for additional place of business - registration was granted without the consent of the petitioner, who is the owner of the premises - HELD THAT:- The 1st respondent will take up the plea made by the petitioner on Ext.P7 petition without any further delay and after affording reasonable opportunity of being heard to the petitioner as well as the 2nd respondent will render a considered decision thereon within a period of 6-8 weeks from the date of production of the certified copy of this judgment. Petition disposed off.
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Income Tax
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2020 (1) TMI 1001
Refund claim u/s 119 (2) (b) - condonation of delay for issue of belated refund - compensation received by the assessee in pursuance of land acquisition proceedings claimed exempt under Section 10 (37) - benefit of exemption to agricultural land denied - HELD THAT:- In the present case, we are concerned with Sub Clause (iii) (b) (II) which provides that agricultural land is exempted from the purview of capital gains unless the area is within the distance, measured aerially, not being more than 6 Kms from the local limits of any municipality or cantonment board referred to in item (a) (land situated in in any area which is comprised within the jurisdiction of a municipality whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name or a cantonment board and which has a population of not less than ten thousand) and which has population of more than one lakh but not exceeding 10 lakh. The report received by the Respondent states that khasra No. 1243 is outside the municipal limit, but is situated within 1 Km from the local limits of municipality of Doraha Town and has a population of more than 25,000 as per 2011 census. Thus, according to this report, the land in question cannot be considered to be agricultural land. Petitioner has not been able to furnish any documentary evidence to contradict the aforesaid report. Material shown to us by the Respondent leads to the conclusion that the land in question would be categorized as a capital asset. Therefore, the assessee cannot claim the benefit of exemption to agricultural land and hence, the compensation received by the assessee in pursuance of land acquisition proceedings, is subject to tax and the refund has been rightly rejected, as being barred by limitation.
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2020 (1) TMI 998
Settlement Application u/s 245C(1) - assessee disclosed additional income during the course of settlement - fresh and substantial disclosure or not - it is far greater than the initial disclosure - Commission accepted the disclosures made by respondent assessee after considering the detailed item -wise explanation submitted by respondent assessee - whether the order of Commission is contrary to any of the provisions of the Act or not and if so, apart from grounds of bias, fraud and malice which of course constitute a separate and independent category, has it prejudiced the petitioner or not? - HELD THAT:- Merely because the respondent assessee has disclosed additional income of ₹ 12 Crore during the course of settlement, it cannot be said that Commission has not followed the procedure prescribed under the Act of 1961. The disclosure made during the course of the proceedings before the Commission is not new disclosure as found by the Apex Court in case of Ajmera Housing Corpn. [ 2010 (8) TMI 35 - SUPREME COURT] On perusal of the impugned order passed by the Commission, it is apparent that the application submitted by the respondent has been dealt with as per the provisions of section 245C and 245D of the Act. The Commission has observed detailed procedure while exercising powers under section 245D(4) of the Act of 1961 by examining thoroughly report submitted by the petitioner under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997. The Commission has also provided proper opportunity of hearing to the respective parties and therefore the amount which has been determined by the Commission is just and proper. In view of the aforesaid decisions cited by the respondent, the Commission was right in considering the revised offer made by the respondent during the course of the proceedings in the nature of spirit of settlement. Therefore, the decision of the Apex Court in case of Ajmera Housing Corpn. (supra), would not come into operation in facts of the case. We are therefore of the opinion that order passed by the Commission does not call for any interference. In view of exercise of the powers by this Court under Article 226 of the Constitution of India, the examination of the order of the Commission has to be made keeping in mind the scope of judicial review as per the decision of Apex Court in case of Jyotendrasinhji [ 1993 (4) TMI 1 - SUPREME COURT] . Therefore, keeping in view the exercise of extraordinary jurisdiction and in view of the overall background of facts whereby the Commission has thoroughly minutely examined all the details relating to the issue in question and arrived at a particular finding, same cannot be substituted.
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2020 (1) TMI 995
Deduction on provision for bad and doubtful debts u/s.36(1)((vii) as well as U/s.36(1)(viia) - HELD THAT:- As decided in ow case [ 2018 (5) TMI 1627 - ITAT BANGALORE] held that the deduction u/s.36(1)(viia) of the Act cannot be allowed unless the provision is created by debited to provision for bad and doubtful debts account - we hold that the AO was justified in disallowing the claim for deduction on account of provisions for bad and doubtful debts u/s.36(1)(viia) of the Act as admittedly the Assessee did not debit its profit and loss account any sum towards provision for bad and doubtful debts. TDS u/s 194A - Addition u/s.40(a)(ia) - non-deduction of tax at source in respect of interest paid during the financial year - non filing of Form 15G and 15H with the prescribed authority - HELD THAT:- Respectfully following the decision of the Tribunal in Assessee s own case [ 2018 (5) TMI 1627 - ITAT BANGALORE] we hold that the CIT(A) was justified in AO was justified in deleting the disallowance of interest expenses u/s.40(a)(ia) of the Act, to the extent of the disallowance relates to interest paid to persons furnished Form 15 G and Form 15 H to the assessee as no disallowance can be made u/s 40a(ia) of the Act as held by the Hon ble Karnataka High Court in the case of Sri Marikamba Transport Co. [ 2015 (6) TMI 181 - KARNATAKA HIGH COURT] . The requirement of filing of Form 15G and 15H with the prescribed authority viz., CIT is only procedural and that cannot result in a disallowance u/s 40a(ia) of the Act. Consequently, we uphold the order of CIT(A) and dismiss Gr.No.3 raised by the Revenue.
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2020 (1) TMI 994
Reopening of assessment u/s 147 - underreporting of the rental receipts by the assessee - assessee had understated his rental receipts as against those reflected in his TDS statement for the year under consideration - HELD THAT:- As had been observed A.O while framing the assessment had not made any addition in respect of the aforesaid issue which had formed the very basis for reopening the case of the assessee. Rather, the additions/disallowances made by the A.O in respect of the income shown by the assessee under the head house property are absolutely on a different footing as had been culled out by us hereinabove. Accordingly, as the A.O while framing the assessment u/s 143(3) r.w.s 147 had not made any addition as regards the underreporting of the rental receipts at ₹ 99,34,023/- by the assessee in his return of income, as against that reflected in his TDS statement at ₹ 1,35,32,274/-, therefore, in the absence of any addition in respect of the issue on the basis of which the case of the assessee was reopened, the assessment framed by the A.O under Sec. 143(3) r.w.s 147, dated 30.06.2014 cannot be sustained. Accordingly, in the absence of any valid assumption of jurisdiction by the A.O under Sec. 147 of the Act, the assessment framed by him under Sec. 143(3) r.w.s 147, dated 30.06.2014 cannot hold the ground and is liable to be quashed. On the basis of our aforesaid deliberations, we herein quash the assessment framed by the A.O under Sec. 143(3) r.w.s 147, dated 30.06.2014 for want of jurisdiction. As we have quashed the assessment order passed under Sec. 143(3) r.w.s 147, dated 30.06.2014, for the reason, that the A.O had exceeded his jurisdiction, therefore, we refrain from adverting to and therein adjudicating upon the other contentions advanced by the ld. A.R, which thus are left open.
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2020 (1) TMI 993
Bogus sundry creditors - addition u/s 68 - CIT(A) accepted the additional evidences restricting part addition - whether sufficient opportunity to AO to rebut the evidences so filed given or not? - HELD THAT:- CIT(A) has categorically observed that the confirmation was also filed with the A.O. vide letter dated 9.1.2015. It is also transpired from the records that the Ld. CIT(A) had sought remand report from the A.O. in respect of additional evidences filed by the assessee. Therefore, it cannot be concluded that the confirmations were filed first time before the Ld. CIT(A) and no opportunity was granted to the A.O. for rebutting the same. From the records, it is clear that the A.O. was given sufficient opportunity to rebut the evidences so filed. Under these facts, we see no reason to interfere with the finding of the Ld. CIT(A) and the same is hereby affirmed. The grounds raised by the revenue are dismissed.
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2020 (1) TMI 992
Bogus purchases - CIT- A estimated profit from Hawala purchases by disallowing only 12.5% of the bogus purchases - HELD THAT:- CIT(A) has decided the matter of controversy on the basis of the decision of Hon ble Bombay High Court in the case of CIT Vs. Nikunj Eximp Enterprises Pvt, Ltd. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] and CIT Vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] and CIT Vs. Bholanath Poly Fab (P) Ltd. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] . The CIT(A) has also gone through the case and restricted the bogus purchase to the extent of 12.5% of ₹ 1,97,383/- i.e.24,672/-. However, at the time of argument, the Ld. Representative of the assessee has no objection to restrict the addition to the extent of 12.5% of the bogus purchase. Anyhow, on seeing the facts and circumstances, it seems quite justifiable to restrict the addition to the extent of 12.5% of the bogus purchase. We nowhere found any illegality and infirmity in the order passed by CIT(A) in question. - decided against revenue
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2020 (1) TMI 991
Rectification of mistake - levy of penalty u/s 271(1)(c) - HELD THAT:- Tribunal has disposed of the appeal of the assesee ex-parte for non appearance of the assessee. The contentions of the assessee is that there is an error in the order of the Tribunal, inasmuch as in disposing of penalty appeals, when the quantum appeal was pending before the Ld.CIT(A). We find that when, the quantum appeal is pending before the lower authorities, disposing of penalty appeal on the same issues on which penalty has been levied would constitute a mistake apparent on record. Therefore, we are of the considered view that there is a merit in the miscellaneous applications filed by the assessee and accordingly, the order of the Tribunal is recalled and the appeals are posted for hearing on 26/02/2020, for which no separate notice will be issued to either parties.
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2020 (1) TMI 990
Levy of FBT on the provision of free electricity by the assessee to its employees - Assessment u/s 115WE(3) - assessee s stand is that the same is a perquisite in the hands of the employees, forming part of their salary income and, therefore, excluded under FBT (s.115WB(3)) - assessee-employer deny its liability u/s. 4 r/w s. 192, as well as u/s. 115WA(1), i.e., qua a benefit to the employees, by raising a plea that the tax on former is payable by the employees, so that the tax gets collected or paid under neither - HELD THAT:- Only an acceptance of it s liability to deduct and deposit income-tax on the perquisite to its employees and, rather, doing so, would operate to save the assessee of it s liability to tax u/s.115WA(1). The facts of the case are admitted and borne out by the record, being admittedly the same as for AY 2006-07, as is the position of law for both the years. The assessee does not admittedly accept its liability to deduct and deposit tax at source on the said benefit. It is accordingly liable u/s. 115WA(1). We may also clarify that inasmuch as the assessee was not heard on said denial (toward TDS) on the provision of free/concessional electricity to its employees for their household consumption, we are not issuing any final finding in the matter. Our decision rests on the premise that the said denial would render it liable to FBT u/s. 115WA(1) inasmuch as it would effectively preclude it from raising the plea of the tax on the said benefit being payable by the employees. That is, it is not open for it to take a contrarian stand, as it apparently does inasmuch as it admits to neither the tax liability on the benefit to its employees and, consequently, to deduction of tax at source and the consequential liability u/s. 201(1)/201(1A), as well as to tax u/s. 115WA(1). In fact, it does not admit to FBT even in respect of the employees not covered u/s. 17(2)(iii), i.e., on which the plea of the tax being payable by the employee is, even de hors s. 192, not applicable. Assessee's appeal dismissed.
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2020 (1) TMI 989
Addition u/s 14A r.w. Rule 8D - assessee argued that the assessee s own funds is more than investment - HELD THAT:- Where the interest free funds available with the assessee was sufficient to make the advance to its sister concern then such investment should be presumed to be made from interest free funds available and not out of borrowed funds and in the said circumstances disallowance of interest paid on loan taken would be justified. Thus we are of the view that the no disallowance is required in view of the provisions u/s 14A r.w. Rule 8D(2) of the Act. So far as the disallowance in view of the provisions u/s 8D(2)(3) is concerned, the AO took into consideration of 0.5% of the total value of the investment to the tune of ₹ 4,70,58,853/- which comes to the tune of ₹ 3,66,23,909/-. The assessee nowhere disallowed the expenditure to earn the exempt income. We nowhere found any illegality and infirmity while deciding the issue in pursuance of Section 14A r.w. Rule 8D(3) of the Rules. But it is also quite correct that the disallowance is not required to exceed more than the exempt income in view of the decision of Cheminvest Ltd. Vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT ] and CIT Vs. Holcin India Pvt. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT ]. Accordingly, we restrict the disallowance to the extent of exempt income i.e. to the tune of ₹ 94,00,147/-. Accordingly, this issue is decided in favour of the assessee against the revenue. Addition u/s 14A r.w. Rule 8D of the Rules on account of Explanaton-1 to Section 115JB - HELD THAT:- The provisions of Section 14A of the Act is confines to the nowhere provisions of Chapter IV of the Act and the said Section 14A cannot be extended and read into section 115JB falling under Chapter XII-B of the Act. Accordingly, no addition is required u/s 14A and Section 115JB of the Act, hence, we delete the addition and allowed the claim of the assessee.
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2020 (1) TMI 988
Condonation of delay - delay of 1971 days - intimation u/s.200A - HELD THAT:- Intimation u/s.200A of the Act became an appealable order u/s.246A of the Act, only consequent to amendment by the Finance Act, 2015 w.e.f. 1.6.2015. Prior to the said date an intimation u/s.200A was not appealable. At the outset, we observe that the Hon ble Supreme Court, in the case of Mst. Katiji [ 1987 (2) TMI 61 - SUPREME COURT] , has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. The ITAT Hyderabad Bench in the case of MSV IT Solutions Ltd. Vs. ITO, Ward 16(4) . [ 2018 (10) TMI 1774 - ITAT HYDERABAD] wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A). Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. Accordingly the delay is condoned.
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2020 (1) TMI 987
Disallowance of prior period expenses while calculating income under the normal provision of the Act - HELD THAT:- When the assessee followed the mercantile system of accounting, expenditure incurred during the previous year though pertaining to an earlier period is deductable. We have carefully considered the judgment passed in the matter of Kedarnath Jute Mfg. Co. Ltd.-vs-CIT [1971 (8) TMI 10 - SUPREME COURT] where it was held that where the assessee has followed mercantile system of accounting and distributing the liability to pay to sales tax and not making provision in its books of accounts particularly when the demand raised on the basis of the sales made during the accounting year the assessee entitled to deduct the amount of sales tax on the basis of the liability incurred and even in the absence of entries in the books of accounts, the same is admissible. The expenditure is not to be disallowed merely because it related to earlier previous year. In short under mercantile system of accounting the liability is allowable in the year it crystallized and thus the claim of the assessee seems to be justified and hence allowable See SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES [ 1994 (10) TMI 30 - GUJARAT HIGH COURT] . The addition made in this respect is, therefore, deleted. Addition towards amount received on account of advance against depreciation - CIT-A direct the AO to verify the claim of the appellant in the event the appellant is able to prove that any income has been taxed in the subsequent assessment year is in fact adjusted against advance such income would not be liable to be taxed in the year in which the appellant company has shown any income - HELD THAT:- It is the case of the assessee that such advances to be adjusted with the power so supplied in the future. We, thus, having regard to the facts and circumstances of the case find no infirmity in the order passed by the Learned CIT(A) in making such direction upon the Ld. AO with the guidelines framed therein in order to grant relief to the assessee if permissible under the law, so as to warrant interference. Hence, we confirm the order passed by the Ld. CIT(A).
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2020 (1) TMI 985
Deduction u/s 10B on the manufacturing services carried out - apparent mistake in the Tribunal order - HELD THAT:- Ratification by the Board relates back to the date of actual grant. From para no. 30, the Tribunal is discussing about other aspect i.e. the assessee s claim of deduction u/s. 10B with regard to R D activities and till para no. 43, the discussion is only about R D activities and thereafter in para 44 of the impugned Tribunal order as reproduced above, it was held that ground nos. 1 to 5.4 raised by the assessee are dismissed. Hence in our considered opinion, there is apparent mistake in the Tribunal order because ground no. 5.4 raised by the assessee in respect of deduction claimed by the assessee u/s. 10B of the IT Act on the manufacturing services carried out by the assessee was not decided specifically and this ground was dismissed in spite of this finding in para no. 29 of the Tribunal order that ratification by the Board relates back to the date of actual grant of permission. Hence, we recall this Tribunal order for Assessment Year 2009-10 for limited purpose for deciding ground no. 5.4 of this appeal for Assessment Year 2009-10. Appeal of the revenue for Assessment Year 2011-12 was decided in favour of the revenue simply on this basis that in assessee s appeal for Assessment Year 2009-10, the issue regarding deduction u/s. 10B was decided against the assessee. We have already held in the above para that for Assessment Year 2009-10, the matter has to be heard again for the limited purpose for deciding ground no. 5.4 raised by the assessee in that year. This was the submission of assessee before us that for Assessment Year 201112, deduction allowed by ld. CIT(A) was only regarding manufacturing activities and since the issue regrading allowability of deduction u/s. 10B for manufacturing activity is to be decided again by the Tribunal, the appeal of the revenue for Assessment Year 2011-12 should also be decided simultaneously. Hence, we recall the impugned Tribunal order for deciding the appeal of the revenue for Assessment Year 2011-12 simultaneously while deciding ground no. 5.4 in assessee s appeal for Assessment Year 2009-10.
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2020 (1) TMI 984
Disallowance of advances to employees towards travelling expenses - addition as expenditure has not crystallized during the year and the provision made is of contingent nature - CIT-A deleted the addition - HELD THAT:- Amount in dispute was actually paid to the employees during the year, though, the claims of the employees in respect of such expenditure were not received. However, that by itself does not make the provision for expenditure contingent in nature. The factual aspect of the issue was verified by ld. Commissioner (Appeals) and he has concluded that the expenditure has crystallized during the year. The Revenue has also not brought any material on record to show that any part of the aforesaid expenditure was claimed by the assessee in the succeeding assessment year. In view of the aforesaid, we do not find any infirmity in the decision of ld. Commissioner (Appeals) on the issue. - Decided against revenue Disallowances u/s 40(a)(ia) - short deduction of tax or non deduction of tax - HELD THAT:- As per Assessing Officer s own admission, the assessee had deducted tax at source on payment of rent, interest, contract labour charges, freight and forwarding charges at a lower rate and not at the rate prescribed under the relevant provision. Thus from the aforesaid facts it becomes clear that it is a case of short deduction of tax and not a case of non deduction of tax. Therefore, as held in the case of CIT vs. S.K. Tekriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] , no disallowance under section 40(a)(ia) can be made for short deduction of tax at source. Applying the ratio of the aforesaid decision also, the disallowance made by the Assessing Officer under section 40(a)(ia) is unsustainable. As regards payment of sales commission, it appears from record that the payment made is towards incentive / turnover discount to authorized channel partners by way of credit note subject to achievement of certain targets. Thus, the payment made does not come strictly within the meaning of brokerage / commission. The decision of Hon ble Jurisdictional High Court in case of CIT vs. Intervet India P. Ltd. [ 2014 (4) TMI 353 - BOMBAY HIGH COURT] clearly supports this view. - Decided in favour of assessee.
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2020 (1) TMI 983
Transfer u/s 127 - validity of Revision order u/s 263 - Assessment framed without having jurisdiction over the assessee - as per assessee case of the assessee was transferred from the jurisdiction of the ITO 12(1), Ahmedabad to Dy.CIT Circle 12, Ahmedabad to the present ITO 2(3), Ahmedabad (the A.O. for short) without following the procedure for the transfer of a case - whether the transfer of jurisdiction of the assessee in the light of the facts and circumstances described above, is within the provisions of law as specified under section 127? - HELD THAT:- Jurisdiction of the assessee from one AO to the other AO can be transferred by Director General, Principle Commissioner or Commissioner only after recording the reason and giving an opportunity of being heard to assessee in pursuance to the provisions specified under section 127 of the Act. However, we note that there was no compliance of the provision of section 127 of the Act for transferring the case of the assessee from ITO ward 12(1) to DCIT-Circle 12 and then further transfer to ITO ward 2(3) of the income tax office. On a question to the learned DR to ascertain whether there was any order passed by the competent income tax authorities under section 127 of the Act for transferring the case of the assessee from one AO to the AO. But he could not make any satisfactory reply. Therefore, we are of the view that the assessment order passed under section 143(3) of the Act dated 27 December 2007 by the DCIT-Circle 12 and consequential assessment order under section 143(3) read with section 263 of the Act dated 7 December 2010 by the AO of ward 2(3) is invalid as such income authorities never had jurisdiction over the assessee in the manner provided under section 127 of the Act. Thus both the orders are liable to be quashed. See AJANTHA INDUSTRIES AND OTHERS VERSUS CENTRAL BOARD OF DIRECT TAXES AND OTHERS [ 1975 (12) TMI 1 - SUPREME COURT] Order passed by the AO as discussed above is not sustainable in the eyes of law. Accordingly, any addition made to the total income of the assessee in such order cannot be upheld - Decided in favour of assessee.
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2020 (1) TMI 982
Addition u/s 69A - unexplained Jewellery - unaccounted Cash - HELD THAT:- In the present case it is noticed that the A.O. accepted the Jewellery shown by the HUF of the assessee i.e; Rakesh Bansal HUF but did not accept the Jewellery shown in the Wealth Tax Returns of another persons belonging to the family of the assessee. In our opinion when the facts were similar, the contrary stand taken by the A.O. was not justified when the assessee was having sufficient quantity of the gold disclosed in the Wealth Tax Returns and SBI Gold Bond Deposit Scheme as well as Gold Bonds 1998 then there was no reason to make impugned addition particularly when total gold available with the assessee as shown in the Wealth Tax Return and obtained on maturity of Gold Bond Scheme was weighing 5208 gms which was more than the gold / Jewellery weighing 4019.45 found during the course of search. Additions towards unaccounted Cash - Held that:- the Assessee was a Director of M/s Sarvesh Spinners Pvt., Ltd. so the cash belonging to that concern may also be held by the assessee. In the instant case, the assessee was taking a consistent stand before the A.O. as well as the Ld. CIT(A) that he was holding position of Director in the Company namely M/s Sarvesh Spinners Pvt. Ltd. and nothing is brought on record to substantiate that the said contention of the assessee was not true, therefore this explanation of the assessee that cash amounting to ₹ 2,27,282/- was retained by him in capacity of the Director of M/s Sarvesh Spinners Pvt. Ltd. cannot be doubted particularly when this fact was verifiable from the record of Registrar of Companies. We therefore considering the totality of the facts are of the view that the impugned addition on account of cash found, made by the A.O. and sustained by the CIT(A) was not justified. Accordingly the same is deleted. - Decided in favour of assessee.
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Customs
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2020 (1) TMI 981
Failure to fulfill post import conditions - import of various parts of Aircraft classifiable under heading 8802 - shortage of miniscule 0.0133% of total inventory - benefit of exemption under Notification No 21/2002-Cus dated 01.03.2002 - requirement to maintain the proper inventory of the imported goods, so as to show the proper utilization of the goods in the manner as prescribed by the notification - HELD THAT:- From the facts available on record it is evident that the auditors were appointed by the appellant for maintaining and verifying the records of inventory of the imported goods. It is on the basis of the report submitted by the appointed auditors, that shortages and excesses have been determined. The excesses and shortages were determined by the auditors/ chartered accountants appointed by the appellants themselves after undertaking physical verification of the inventory, we do not find any reasons to differ with the conclusions arrived at by the Commissioner - the demand of duty upheld as the appellants have not been able to satisfy the post importation conditions in respect of the shortages determined. Excesses stock - import without following the procedure - HELD THAT:- The appellant has not been able to offer any justifiable reason for the excesses. These goods have been imported without following the procedure for clearance of the imported goods as per the Customs Act, 1962. Since these goods are have been imported without following the procedure as prescribed they have been held liable for confiscation and have been confiscated by the Commissioner. However though these goods are liable for confiscation, but were never seized and released provisionally to the appellants against Bond and Bank Guarantee. Thus while upholding the demand of duty made in respect of the excesses as these goods were cleared without filing proper import declaration as require under the Customs Act, 1962, the order of confiscation of goods and redemption fine imposed is set aside. Demand of interest under Section 28AB on the amount short paid - HELD THAT:- The interest as provided by the statue is for the delay in the payment of duty from the due date. Since the demand has been upheld, demand for interest too is upheld. Appeal allowed in part.
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Service Tax
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2020 (1) TMI 986
Valuation - inclusion of value of the electricity charges recovered as reimbursements from Gujarat Gas - liability to pay Service tax on the electricity charges on actual basis paid by them - HELD THAT:- The contract puts the liability of expenditure of Service Tax on Gujarat Gas and they have also placed a separate meter for assessment of the actual electricity consumed. The issue is squarely covered by the decision of this Tribunal in the case of M/S. KIRAN GEMS PVT LTD VERSUS C.C.E. S.T. -SURAT-I [ 2018 (11) TMI 1388 - CESTAT AHMEDABAD] where after relying on the decision of Tribunal in the case of M/S ICC REALITY (INDIA) PVT LTD OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2013 (12) TMI 854 - CESTAT MUMBAI] , M/S. HOTEL LAKE VIEW ASHOK VERSUS CGST, CE CC, BHOPAL [ 2018 (9) TMI 500 - CESTAT NEW DELHI] and M/S S.B. DEVELOPERS LIMITED VERSUS CST, NEW DELHI [ 2018 (5) TMI 1673 - CESTAT NEW DELHI] , it was held that electricity charges reimbursed to the service provider by the service recipient are not includable in gross value of renting of immovable property service - the said principle is equally applicable in the instant case. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (1) TMI 999
Benefit in the Arrears Category of SAB KA VISHWAS (LEGACY DISPUTE RESOLUTION) Scheme 2019 (svldrs scheme) - HELD THAT:- There is force in the submission of the learned counsel for the petitioners that the Scheme in question being for the benefit of Assesses needs to be construed liberally to effectuate the purpose and therefore, if the petitioners claim cannot be considered under the Arrears Category, they should be permitted to avail the benefit under any other Category into which their case is fit; the respondents in their Statement of Objection dated 09.01.2020 at paragraph 6 have specifically stated that though the petitioners are not entitled to stake their claim under Arrears Category, they may opt for the benefit under Voluntary Disclosure Category; the statement of the learned Panel Counsel for the Revenue that petitioners claim would be considered under this Category if they opt, is placed on record. These writ petitions succeed in part - a Writ of Mandamus issues to the respondent Revenue to consider petitioners claim for the benefit under Voluntary Disclosure Category of SAB KA VISHWAS (LEGACY DISPUTE RESOLUTION) Scheme 2019, subject to they making an appropriate application as prescribed by law and within time.
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2020 (1) TMI 997
SSI exemption - use of brand name of others - demand has been made against M/s JSFPL on the ground that they have shown their own clearances as being manufactured and cleared by other units as well as sold own manufactured goods under resale invoices by showing the same as traded goods - reliance placed upon the statements of partners/proprietors of units and statement of director of M/s JSFPL. HELD THAT:- The Appellant during adjudication proceedings have contended that all the partners/ proprietors cannot read/ write English being only 7th or 9 th standard pass in vernacular language and even signed the statements in Gujarati Language. Thus in view of the fact that the evidences found during search are just contrary to the allegations, no adverse inferences can be drawn against Appellant and its associate manufacturing unit. When against the actual situation of associate concerns engaged in manufacturing furniture was manifest from the panchnamas and the show cause notice relied upon the statements to allege otherwise, the adjudicating authority should have allowed the cross examination - when the Appellant unit has not been granted the opportunity to cross examination of persons whose statements have been relied upon to make allegation against the Appellant, the demand cannot be confirmed based upon such statements. Only on the basis of statement without any corroborative evidence, no allegation can be made against the Appellant. It is undisputed fact that the Appellant unit was doing trading of goods also and even if assumed that the goods were delivered to their firm, it cannot be said that the goods so delivered were manufactured by M/s JSFPL. Even Shri Hemnani in his statement has not stated that the said furniture was manufactured by M/s JSFPL. Thus the statement of Shri Hemnani cannot be made ground to hold that M/s JSFPL has cleared goods manufactured by them under the cover of estimate chits - as long as the associate units were found to be engaged in manufacturing of furniture, it cannot be said that the said furniture was manufactured by M/s JSFPL. In such case when the demand has been issued by overlooking the actual facts cannot be permitted to sustain. The charges against M/s JSFPL of removing goods without payment of duty are not sustainable - the demand and penalty imposed against M/s JSFPL set aside - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 996
CENVAT Credit - input services - contract for supply of certain technology/Know-how - entire case of revenue is that the appellant have not used the service provided by SPIL SPARC and, therefore, they cannot avail the said credit of service tax paid by SPIL SPARC - HELD THAT:- The only fact that revenue has used to insist that the service was provided to the appellant and exported by the appellant on the same day is that the date of invoice is common. It is apparent from the facts of the case that the service was not provided in one day, the service was provided in a particular time duration and the service provided was being simultaneously used by the appellant by Supervising and Monitoring the activity in the entire duration. Thus, it cannot be correct to say that the service provided by the SPIL was not used by the appellant. The revenue s argument is that the entire service was provided on the date of invoice is totally fallacious and illogical. Thus, the appellants received and consumed the service while they were participating in the development of technology by supervising and monitoring the same. There are no merit in the argument of the revenue that the services provided by SPIL was not used by the appellant and were exported as such - the agreement in respect of SPARC is also the same and, therefore, the arguments above are equally applicable to the services provided by SPARC - thus, there are no merit in the arguments of the revenue that services were exported without use by the appellant and, therefore, no credit is admissible. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 980
Relief from putting retail sales price (RSP / MRP) - Clearance of cement bagged in individual bags to industrial buyers - Benefit of N/N. Sl.No.1C of the notification 04/2006-CE as amended - Department was of the view that the customers to whom the assessee has sold the cement cannot be termed as industrial consumers and therefore duty has to be paid in terms of Sl.No.1A of the notification - HELD THAT:- The issue is no longer res integra as it has been decided by the Hon ble High Court of Karnataka in the case of COMMISSIONER OF C. EX., BANGALORE-II VERSUS MYSORE CEMENTS LTD. [2010 (8) TMI 246 - KARNATAKA HIGH COURT] that the benefit of exemption N/N. 04/2006-CE (Sl.No.1C) is available to cement bagged in 50 kg bags but marked as cement meant for bulk use without printing the RSP and supplied to industrial/institutional consumers. The assessee is entitled to the benefit of exemption N/N. 04/2006-CE (Sl.No.1C) in respect of the cement supplied to institutional consumers in 50 kg bags - The demand and interest, if any, on account of sales to individuals by the assessee are upheld and all penalties are set aside - appeal is allowed by way of remand to the original authority for the limited purpose of determining the duty, if any, payable and interest.
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Indian Laws
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2020 (1) TMI 1002
Grant of post-arrest bail - mandate of Section 37(1)(b)(ii) of the Narcotic Drugs and Psychotropic Substances Act, 1985 ignored - allegation against the accused respondent (A5) was that he entrusted hashish oil to A1 through A2 for sale in the International market and Crime was registered against him for the offences punishable under Sections 20(b)(ii)(c) and Section 29 of the NDPS Act and after investigation, charge-sheet was filed on 10th May, 2019. HELD THAT:- Hashish oil is shown at Sl. No. 13 in the notification dated 19th October, 2001 issued by the Central Government in exercise of power under Section 2(viia) and (xxiiia) of the NDPS Act. Hashish oil above 1 kg is commercial quantity - The jurisdiction of the Court to grant bail is circumscribed by the provisions of Section 37 of the NDPS Act. It can be granted in case there are reasonable grounds for believing that accused is not guilty of such offence, and that he is not likely to commit any offence while on bail. It is the mandate of the legislature which is required to be followed. At this juncture, a reference to Section 37 of the Act is apposite. That provision makes the offences under the Act cognizable and non-bailable. The expression reasonable grounds means something more than prima facie grounds. It contemplates substantial probable causes for believing that the accused is not guilty of the alleged offence. The reasonable belief contemplated in the provision requires existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence. In the case on hand, the High Court seems to have completely overlooked the underlying object of Section 37 that in addition to the limitations provided under the CrPC, or any other law for the time being in force, regulating the grant of bail, its liberal approach in the matter of bail under the NDPS Act is indeed uncalled for. The appeals are allowed and the impugned order passed by the High Court releasing the respondents on bail is hereby set aside - Bail bonds of the accused respondents stand cancelled and they are directed to be taken into custody.
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