Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of service - Works contract service or not - The proposed activity of setting-up of the data centre facilities as explained would qualify as ‘works contract’ as per Section 2(119) of GST Act. - Taxable @18% of GST
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Proper Officer - territorial Jurisdiction - Power to appoint 'proper officer' is with the Government u/s 3(2) read with section 5 - By way of circular, and notification issued by the Board, Central Excise Officers entrusted the duties of Proper Officer under GST - The mistake, showing them as issued by the 'Board' stands corrected, as having issued by the "Government" - Petition dismissed.
Income Tax
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Benefit of set off of loss in share dealing by treating the same as business loss - what constitutes principal business will essentially depend on the facts and circumstances of each case - the principal or dominant business of the assessee was granting loans & advances and thereby the assessee falls outside the ambit of the Explanation to Sec. 73
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Maintainability of writ petition against order of Settlement Commission’s order - Acceptance of order in part and part in piecemeal challenge - The order insofar as it relates to determination of deemed dividend as the income of the petitioner for the assessment years 2009-2010 to 2013-2014 are concerned, is hereby quashed
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Validity of Revision u/s 263 against the amalgamating companies - the impugned order passed u/s 263 of the Act by the Ld. Pr. CIT against the amalgamating companies which were not in existence on the date of the impugned order is a nullity
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Depreciation on goodwill - The consolidated payments made by assessee over and above net assets acquired by it under a composite contract in the present case before us, in our considered view is towards goodwill and non compete agreement - Depreciation allowed.
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Levy a penalty u/s 271G - default of non-submission of documents within stipulated period as required u/s 92D(3) - Though there is a delay on the part of the assessee to file the requisite documents but ultimately documents have been filed and assessment has been framed and moreover no malafide on the part of the assessee not to comply with the provisions - Penalty deleted.
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Addition on account of credit card payment - Since the assessee has himself capitalized these amounts by transferring the same to his capital account without crediting the same in the profit and loss account, additions were rightly made.
Customs
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Proceedings against the officers for seeking bribe - there is prima facie material relating to demand of a sum of Rs.ten lakhs through electronic evidence like video graphy - question of obtaining prior approval under Section 17A of the PC Act is not warranted.
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Forfeiture of security deposit - Time Limitation - illegal import of goods - the Show Cause Notice was issued on 14.9.2018 and the inquiry report was submitted only on 21.2.2019 which is beyond 90 days prescribed in sub-regulation (5). - When the KYC details have been obtained, the appellant cannot be found fault alleging that he did not directly meet the IEC holder before filing the Bill of Entry or doing any such transaction as Customs Broker.
Corporate Law
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Condonation of delay - Period of limitation - supply for ‘Transfer of Shares’ and ‘Rectification of Register’ - It cannot be gain said that ‘Right to refuse’ registration of transfer of shares, ‘Sufficient Cause’ is question of law and the cause shown for refusal is sufficient or otherwise in a given case, can also be a ‘mixed question of law’ and fact. Besides this, a refusal may be on the basis of ‘Breach of Law’ or any other ‘Sufficient Cause’.
SEBI
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Acquisition of shares accounted for 16.77% of the total shareholding - The case of all the appellants in this regard is that they had not “acquired” shares. - They executed agreement for pledge of the shares with these two appellants as a security towards finance to be raised. - Rule requires, disclosures even in case of pledge to private individual - Violation of rules established.
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Manipulative orders in a short time - the appellant’s strategy was to purchase bulk of the shares at a lesser market price. Thereafter, he used to place buy orders on the opening of the market at much higher price than the LTP for small number of shares some time one share only. Once that order got executed then he used to sell his stock at a higher price - trading in a fraudulent manner established.
Wealth-tax
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Wealth escaping assessment - Lack of jurisdiction of ACIT, Circle-9(1), Bengaluru who issued notice u/s 17 - the validity of notice issued u/s 17 of the Act is primarily required to be adjudicated before a decision can be rendered on the merits of the additions made in the assessment.
Service Tax
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Principles of natural justice - mining services - production of oil services - Survey and Exploration - only point raised before this Court is that the Adjudicating Authority has not considered those two Circulars viz., Circular No.32/06/2018-GST and Circular No.35/2018-GST - Petition has appellate remedy before the CESTAT - Petition dismissed.
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Import of services - Reverse charge mechanism - Bank Guarantee Commission - At no stretch of imagination, it can be said that the petitioner's Bank at Chennai, namely, Indian Bank, Adyar, is recipient of the Service provided by the intermediary Bank or the foreign bank situated in Iraq.
Central Excise
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Re-credit of excess duty debited on CIF value, for export - an assessee is entitled to take re-credit of the undisputed amount and have taken the credit under intimation to the Department. The proceeding for disallowing the same is unwarranted - No need to file separate refund application.
Case Laws:
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GST
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2019 (11) TMI 1146
Liability to pay tax - place of supply of services - export of services or not - Pure agent of not - co-ordination services provided by the company to its affiliates outside India - Pass Through expenses charged by the Company to its affiliates located outside India - HELD THAT:- The Agreement entered between the applicant and the PAREXEL International Limited (one of the foreign affiliate of the same group) which is produced as a prototype is verified and found that the applicant is subcontracted a part of the work given to the main affiliate and the applicant performs certain services for and on behalf of the main affiliate on the terms set forth therein. Hence it is clear that the applicant is performing services for and on behalf of the affiliate situated abroad - Further, it can be seen from the submissions made by the applicant that he enters into various agreements on behalf of the sponsor with various investigators and payments are made by the applicant to the investigators. There is no privity of contract between the applicant and the sponsor and the power to enter into agreement with the investigators is derived from the agreement between the applicant and its foreign affiliate which in turn derives the power from the agreement entered between the sponsor and the foreign affiliate. - The various clauses of the agreement show clearly that the applicant is acting as a representative of the sponsor in relation to the supply of services by the Investigators and the payments are made by the applicant. Nature of services - HELD THAT:- The sponsor has entered into an agreement with the foreign affiliate of the applicant. The foreign affiliate has in turn entered into an agreement with the applicant. The applicant has further entered into an agreement with the investigator. The foreign affiliate is providing services to the sponsor as a CRO and the applicant is providing services to the foreign affiliate also as a CRO. There are two services which are involved in the above transaction, one the supply of drug testing services by the Investigator to the sponsor and the second the supply of CRO services to the foreign affiliate. It is also seen in the sample document provided by the applicant, that even this CRO services is again sub-contracted to one, M/s Ecron Acunova Limited. It is seen in the agreement that the payment of fees and expenses would be made by the Sponsor to the Institution solely and through the CRO, i.e. applicant s foreign affiliate, applicant and the subcontractor acting as go-betweens - the applicant is only a pass through for the Sponsor and there is no actual payment by the applicant from his own account to the investigator or institution. The Clinical Testing Services is provided by the investigator and institution to the Sponsors and the CROs (including the applicant) are actually performing the Project Management function and for this the applicant is providing the project management service which is contracted between the CROs and also between the CRO and the sponsor - The agreement of Clinical Trial Services is verified and since the applicant satisfies all the conditions laid down in the Explanation to Rule 33, the applicant qualifies as a pure agent of the recipient of service, i.e. the Sponsor. Whether the Project Management Services provided by the applicant to the foreign affiliate is an export of services or not? - HELD THAT:- In order to decide whether the said services amount to export or not, place of supply of service need to be determined. Section 97(2) of the CGST Act, 2017 empowers the Authority to give a Ruling on time and value of Supply. However it does not empower the Authority to examine the place of supply. In the absence of this provision the Authority is not empowered to answer whether the activity undertaken by the applicant amounts to export or not.
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2019 (11) TMI 1145
Classification of service - Works contract service or not - setting-up of the data centre facilities - rate of GST - CGST Act - Karnataka GST Act - HELD THAT:- The term Works Contract is clearly defined in Section 2(119) of the CGST Act, 2017. The definition is self explanatory and leaves no doubt that it is in relation to an immovable property only. Secondly, in Section 17(5) of the said Act, the term plant and machinery is also defined. Here the machinery, apparatus and equipment is secured to the earth by way of a foundation or structural support. This foundation or the structural support is meant to impart stability to the machine while working. It, however, does not impart the machine/equipment the same degree of permanence that a building acquires when built on its foundation. Here the equipment is fitted on the foundation and the same can be removed and relocated without damaging it. The same does not hold true for a building or an immovable property - the inference drawn from the provisions of Section 17(5) are erroneous. The proposed activity of setting-up of the data centre facilities as explained would qualify as works contract as per Section 2(119) of the Central Goods and Service Tax Act, 2017 and Section 2 (119) of the Karnataka Goods and Service Tax Act, 2017 Rate of tax applicable on the activities proposed to be undertaken by them - HELD THAT:- The activities proposed to be carried out by the applicant qualify to be treated as works contract the rate of tax applicable would be accordingly applied. Notification 11/2017 - Central Tax (Rate) dated June 28, 2017 provides the rates of GST applicable on intra state supply of goods and services. SI. No.3 of the Notification provides that a composite supply of works contract, as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017, is liable to GST @ 18% - Therefore, as the proposed activity falls under the category of the works contract it is liable to tax @18%.
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2019 (11) TMI 1144
Proper Officer - territorial Jurisdiction - Power of search, seizure and issuing summons - Constitutional validity of Annexure P-1 Circular dated 05.07.2017 issued by the Central Board of Indirect Taxes Customs and Annexure P-2 Gazette Notification dated 01.07.2017 - Power to appoint 'proper officer' is with the Government u/s 3(2) read with section 5 - By way of circular, and notification issued by the Board, Central Excise Officers entrusted the duties of Proper Officer under GST - Delegation of power. HELD THAT:- The corrigendum notification' dated 29.07.2019 published in the official gazette clearly reveals that there was an inadvertent mistake in having issued the original notification dated 19.06.2017 and the subsequent Annexure P-2 Notification dated 01.07.2017, wrongly mentioning it as having issued by the 'Board', instead of stating as issued by the Government , and hence, it was corrected accordingly. Since this was definitely to cut the roots of the case filed by the Petitioners, this Court found it appropriate to cause the matter to be listed for consideration again. Accordingly, it was listed on 22.10.2019 and the parties were heard again. The course and conduct of the parties on both the sides in not bringing the relevant 'corrigendum notification' dated 29.07.2019 to the notice of this Court was deprecated and an opportunity was given to make appropriate submissions, after calling for the remarks/explanation from both the sides. Taking note of the fact that there was nothing intentional on the part of the learned counsel for the Petitioners, the learned Assistant Solicitor General or the learned counsel representing the 2nd Respondent/Board in relation to the omission in brining the 'corrigendum notification' dated 29.07.2017 to the notice of the Court, though it was a serious lapse on the part of the parties concerned, no further steps were decided to be pursued. The mistake which appeared in Annexure P-2 Notification dated 01.07.2017 and the previous notification dated 19.06.2017 showing them as issued by the 'Board' stands corrected, as having issued by the Government . The notification having already been published in the official gazette as stated in Section 2(80) of the CGST Act read with Section 3(39) of the General Clauses Act, 1897, the appointment effected in the said notification, in exercise of powers under Section 3, read with Section 5 of the CGST Act and Section 3 of the IGST Act, 2017 has been issued by the 'Government', with whom the exclusive power is vested in this regard. By virtue of the aforesaid notification issued by the Government, all the officers in the Directorate General of Goods Services Tax Intelligence, Directorate General of Goods and Services Tax and the Directorate General of Audit, as specified in Column No. 2 of the table given therein, came to be appointed as 'Central Tax Officers', investing all the powers upon them under the CGST Act, 2017, the IGST Act, 2017 and the Rules made thereunder throughout the country of India, as are exercisable by the Central Tax Officers of the corresponding rank as specified in Column No. 3 of the said table. The challenge raised against Annexure P-1 Circular and Annexure P-2 Notification with reference to the competence of the issuing authority and the manner of issuance does not hold any water at all - petition dismissed.
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Income Tax
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2019 (11) TMI 1151
Benefit of set off of loss in share dealing by treating the same as business loss - whether the principal business of the assessee was granting loans advances and therefore the case of the assessee came within the exception set out in the Explanation to Section 73 ? - HELD THAT:- No additional rider or covenant has been attached by their Lordships which would in any manner suggest that such principal business of granting loans advances must be inter-related with the business of share dealing so as to avail the benefit of the exception set out in Explanation to Section 73. DR's argument that the exception provided in Explanation to Section 73 i.e. a company the principal business of which is the business of banking or the granting of loans and advances is required to be read along with phrase 'consists in the purchase and sale of shares of other companies' and therefore only when the activity of granting loans advances is inter-linked or inter-connected with business of purchase sale of shares that the Explanation to Section 73 is not applicable, is wholly unsustainable. What constitutes the 'principal business' has not been defined anywhere in the Act. Accordingly what constitutes principal business will essentially depend on the facts and circumstances of each case. We however note that certain guiding principles and factors have been laid down by the Special Bench of this Tribunal at Kolkata in the case of Dy. CIT v. Venkateshwar Investment Finance [ 2004 (12) TMI 310 - ITAT CALCUTTA-E] Amongst the two, the principal or dominant business of the assessee was granting loans advances and thereby the assessee falls outside the ambit of the Explanation to Sec. 73 of the Act. Consequent thereto, the loss incurred by the assessee in the business of share dealing cannot be construed as speculation loss. We therefore have no hesitation in holding that the loss incurred by the appellant during the relevant year was assessable as business loss and which the appellant could set-off against its business income inter alia including interest income derived from the business of granting loans. Appeal of the assessee is allowed.
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2019 (11) TMI 1150
Deduction of compensation payment u/s 37(1) - assessee had entered into an agreement for purchase of an immovable property - there were number of charges and impediments in the title to the property and to clear this, the Assessee had to incur considerable expenditure - assessee could not provide the land then an MOU was executed to repay the principal with lumpsum compensation - CIT (A) held that the original MOU with the trust and the cancellation deed were executed on the same day on a stamp paper which was by way of an afterthought - Disallowance of expenditure u/s 37(1) - HELD THAT:- SLP Dismissed.
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2019 (11) TMI 1149
Revision u/s 263 - addition towards entrance fees and annual subscription made by the Assessing Officer in the proceedings under Section 143(3) read with Section 263 - HELD THAT:- Special leave petition is dismissed on the ground of low tax effect.
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2019 (11) TMI 1148
Denial registration u/s 12AA - non filing of return of income - proof of charitable activities - Whether the term 'such documents' would not include returns of income for the purpose of determination of genuineness of activities of a Trust? - HELD THAT:- SLP dismissed.
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2019 (11) TMI 1147
Penalty u/s 271(1)(c) - whether the Assessee is guilty of concealment of income, which is deliberate - Additional income declared by the assessee by filing revised return consequent to notices u/s.143(2) and 142(1) - factual matrix - 'substantial question of law' - HELD THAT:- SLP dismissed.
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2019 (11) TMI 1143
Exemption u/s 10 (10AA) - leave encashment drawn retirement - HELD THAT:- Merely because Public Sector Undertaking and Nationalised Banks are considered as State under Article 12 of the Constitution of India for the purpose of entrainment of proceedings under Article 226 of the Constitution and for enforcement of fundamental right under the Constitution, it does not follow that the employees of such Public Sector Undertaking, Nationalised Banks or other institutions which are classified as State assume the status of Central Government and State Government employees. It has been held in multiple decisions that employees of Public Sector Undertakings are not at par with government servants (Ref: Officers Supervisors of I.D.P.L. v Chairman M.D. I.D.P.L [ 2003 (7) TMI 733 - SUPREME COURT ]. In the noted case of A.K.Bindal v Union of India [ 2003 (4) TMI 406 - SUPREME COURT ] while considering the issue of revision of the pay scales of employees of government companies/PSUs at par with government employees, it was held that the employees of government companies cannot claim the same legal rights as government employees. We therefore, reject the present petition, insofar as the petitioners challenge to the provisions of Section 10 (10AA) is concerned. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10 (10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect.
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2019 (11) TMI 1142
Maintainability of writ petition against order of Settlement Commission s order - Acceptance of order in part and part in piecemeal challenge - Scope of Deemed Dividend where transactions entered are in the nature of commercial transactions - loan/advances is made by a company to concern with common shareholder - current account transactionsin the normal/ordinary course of business - Benefit of exemption u/s 10(34) - HELD THAT:- Impugned order of the Commission is not in conformity with the provisions of the Act and by applying the ratio laid down in Jyotendrasinhji s case [ 1993 (4) TMI 1 - SUPREME COURT] it can be said that the present Writ Petition is maintainable. Likewise, this is not a case where the petitioner had accepted a portion of the impugned order and challenged the rest. As stated earlier, the petitioner offered the income of ₹ 35 lakhs seized as additional income for the assessment year 2013-2014 and also disclosed that the said income was derived out of the sale of Silver Oak trees which were felled at her agricultural lands. The application for settlement was made since the petitioner was not able to prove that the seized cash was out of the sale of such trees. Apprehending that the amounts advanced by RSPL to RTPL may be assessed as deemed dividend is in the hands of the petitioner, a mention was made in the application that the petitioner is a shareholder, holding more than 20% of equity share capital in both the Companies and that RSPL had advanced the money in the ordinary course of its business as corporate loans to RTPL. It is nobody s case that the petitioner claimed a portion of the sum of ₹ 35 lakhs offered as income, to be taxable. Hence the contention of Department that a piecemeal challenge to the Settlement Commission s order is not maintainable, cannot be sustained. As such, this Court is of the view that the challenge to the impugned order of the Settlement Commission by invoking Article 226 of the Constitution of India in this Writ Petition, is maintainable. Relevance and validity of CBDT Circulars - whether the Circulars of the CBDT are binding on the Settlement Commission and if so, whether the contents of these two Circulars would allure to the benefit of the petitioner? - Addition u/s 2(22)(e) - HELD THAT:- Circular was issued on the basis of various judicial precedents, which has been referred to in the Circular itself. References were made in the said Circular to Creative Dyeing and Printing Private Limited [ 2009 (9) TMI 43 - DELHI HIGH COURT] wherein it was held that amounts advanced for business transactions do not fall within the definition of deemed dividend under Section 2 (22) (e) of the Act. Likewise, the CBDT Circular had placed reliance on the decisions in CIT V. Amrik Singh, [ 2015 (4) TMI 1174 - PUNJAB AND HARYANA HIGH COURT] and CIT, Agra V. Atul engineering Udyog, [ 2014 (10) TMI 41 - ALLAHABAD HIGH COURT] wherein advances and security deposits made were held to be transactions which did not attract Section 2 (22) (e). Thus, it is clear that even prior to the issue of this 2017 Circular, the position in law was clear that deemed dividend would not apply to normal commercial transactions. Viewing from this angle also, the petitioner would be entitled to succeed on this ground. Whether deemed dividend is taxable in the hands of the shareholders or concern? - HELD THAT:- While the petitioner contends that deemed dividend is not taxable in the hands of shareholders, the learned Standing counsel for the Department would contend that it is taxable in the hands of the shareholder. To substantiate such a submission, the learned counsel for the Department would attempt to justify that Circular No. 495 of 1987 runs contrary to the provisions. The learned Counsel also submitted that the reference to a larger Bench in the case of National Travel Services [ 2018 (1) TMI 1159 - SUPREME COURT] will not have any inference on this case. It will not be out of place to point out that in National Travel Services one of the learned Judges in the quorum had held that the decision in the case of Ankitech [ 2011 (5) TMI 325 - DELHI HIGH COURT] , as upheld by Madhur Housing [ 2017 (10) TMI 1279 - SUPREME COURT] , was wrongly decided. Nevertheless, since the matter has now been referred to a larger Bench for reconsideration, this Court does not intend to fix the liability of taxation either in the hands of the concern or in the hands of the shareholder, on an assumption that deemed dividend is taxable Whether dividend is taxable u/s 10 (34)? - HELD THAT:- It is not in dispute that Section 2 (24) includes dividend income also. What is pertinent is that such dividend, including the deemed dividend under Section 2(22)(e) of the Act, is exempted under Section 10 (34) of the Act, in the hands of the petitioner. Section 10 (34) of the Act does not provide to say that the dividend will be exempted in the hands of the shareholders only when dividend distribution tax is paid. On the other hand, it only refers to say that as long as the dividend is referred to in Section 115-O of the Act, it will be exempted from tax under Section 10 (34) of the Act. In SMT. KAYAN JAMSHID PANDOLE [ 2018 (11) TMI 1340 - BOMBAY HIGH COURT] has emphatically held that if certain income is exempted in the hands of the recipient by virtue of statutory provisions, such an exemption cannot be withdrawn only because the payer has not paid the tax, unless such provisions are made in the statute itself. In the light of the aforesaid decision, it can be held that the Settlement Commission ought to have passed orders only in accordance with the provisions of the Act and the contrary findings in the impugned order of the Commission, cannot be sustained. As such, the conclusion which this Court is able to arrive on this proposition is that dividend is not taxable as per the provisions of Section 10 (34) of the Act and the contrary findings in the impugned order of the Settlement Commission is deemed to be violative of the statutory provisions and therefore illegal. Department submitted that the decision of the Bombay High Court in Kayan Jamshid Pandole [ 2018 (11) TMI 1340 - BOMBAY HIGH COURT] is distinguishable on facts. We are unable to endorse such a submission. A plain reading of paragraphs 8 to 11 of the said decision reveals that the Bombay High Court had laid down the proposition of law that dividend referred therein, is not taxable, without reference to the facts of that case. Hence it cannot be said that the findings therein could to be distinguished, by applying the facts of that case. Whether provisions of section 2(22)(e) can be applied for the AY where there are more that two shareholders? - HELD THAT:- As seen in the facts of the instant case, the whole amount was already taxed in the hands of the petitioner and the present reassessment order of Mr.Ramasamy amounted to double taxation. What was claimed to be a hypothetical situation has now been disproved in view of the reassessment order of Mr.Ramasamy. It is stated that the matter is now pending for adjudication before the ITAT, Chennai. This Court is of the considered opinion that the CIT (Appeals) has rightly come to the conclusion that the position as regards each debit will have to be individually considered, because it may or may not be a loan. The AO is, therefore, directed to verify each debit entry on the aforesaid line and treat only the excess amount as deemed dividend u/s 2 (22) (e) of the Act. We find such a direction issued by the CIT (Appeals), as upheld by the Tribunal is in consonance with the provision of Section 2 (22) (e) of the Act, and only those amounts, which reflect in the debit side of the books of accounts of the company falling under the definition of loans and advances, with regard to the shareholder, in the relevant year will be entitled to be taken as deemed dividend. Assessment u/s 153A - HELD THAT:- It is a fact that that the ground of absence of incriminating material in relation to deemed dividend, was placed before the Settlement Commission but not considered. The petitioner, by letter dated 31.08.2015, had submitted that there was no incriminating material in relation to deemed dividend found during the search and accordingly, no addition can be made under Section 2(22)(e). The said contention was taken note of by the Settlement Commission in paragraph 7.2 of its order but however, had failed to address the issue. Petitioner had submitted before the Settlement Commission during the course of search under Section 132 of the Act that no fresh incriminating material with respect to the deemed dividend was found. Unfortunately, the Settlement Commission has not addressed this issue at all. Thus, the proceedings under Section 153A r/w. 153C of the Act are not valid. For all the foregoing reasons, this Court is of the affirmed view that the order of the Settlement Commission is not in accordance with the provisions of the Act and therefore, this Court would be justified in invoking its extraordinary powers under Article 226 of the Constitution of India. Accordingly, the impugned order of the Income Tax Settlement Commission insofar as it relates to determination of deemed dividend as the income of the petitioner for the assessment years 2009-2010 to 2013-2014 are concerned, is hereby quashed. The petitioner herein shall be entitled to claim refund of any tax paid, pursuant to the impugned order of the Settlement Commission
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2019 (11) TMI 1141
Addition u/s 68 - as considered the entire case and confirmations filed for 162 persons and came to a conclusion that there is no creditworthiness, the transactions are not genuine as the loans obtained from the farmers, milk suppliers and commission agents and therefore the entire amount borrowed by the assessee is added to the total income of the assessee - HELD THAT:- The assessee carrying small time cashew processing business. He has borrowed small amounts from local people who are milk vendors, ryotvaari coolies and commission agents to carry his business. In the assessment order, the Assessing Officer has found that assessee has borrowed money from 1357 persons, but he filed confirmation letters in respect of 162 persons. By examining the confirmation letters filed by the assessee, the Assessing Officer came to a conclusion that these people from whom the assessee borrowed funds, have no creditworthiness for the reason that they are small time milk vendors, ryotvaari coolies and commission agents. In our opinion, AO has committed a mistake in observing above for the reason that if at all he is having any doubt, he should have to issue summons to the parties and examine them, without doing that simply disbelieving the confirmation letters is not correct. On appeal before the ld. CIT(A) the assessee has filed the confirmation letters from all the remaining creditors. CIT(A) called the remand report from the Assessing Officer and in the remand report, the Assessing Officer has observed that most of the creditors are agriculturists, daily labours and persons working in unorganised sectors. He has also observed that payments should have been made through banking channel, but the assessee has borrowed the funds by taking cash and repaid the same in cash. We find there is nothing wrong in borrowing funds from daily labourers, agriculturists and milk vendors, if at all Assessing Officer is having doubt, he should have called them by issuing summons and examine them. Simply on the basis of that they are not filing returns of income, therefore the amounts borrowed by the assessee cannot be considered as not genuine transaction, is not correct. The Assessing Officer himself observed that the assessee has already repaid ₹ 67,70,700/- to 367 people and 173 creditors were repaid by cash mode amounting to ₹ 31,58,000/- and remaining 194 creditors were repaid through cheque amounting to ₹ 36,12,700/-. Still 34 creditors are yet to be repaid amounting to ₹ 6,21,000/-. By considering the facts and circumstances of the case, we are of the opinion that the assessee has filed the confirmation letters from the loan creditors though small loan creditors who are agriculturists, milk vendors commission agents. All the details are available with the Assessing Officer. Without issuing summons and without examining them, simply on the basis of assumptions and presumptions, confirmations given by the assessee cannot be discarded. - Decided in favour of assessee
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2019 (11) TMI 1140
Validity of Revision u/s 263 against the amalgamating companies which were not in existence on the date of the impugned order - HELD THAT:- The Hon ble Supreme court in MARUTI SUZUKI INDIA LIMITED [ 2019 (7) TMI 1449 - SUPREME COURT] after taking note of the provisions of section 292B of the Act in para 31 held that In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. Also see C.I.T NEW DELHI VERSUS M/S SPICE ENFOTAINMENT LTD. [ 2017 (12) TMI 754 - SC ORDER] We note that the impugned order passed under section 263 0f the Act by the Ld. Pr. CIT against the amalgamating companies which were not in existence on the date of the impugned order is a nullity and, therefore, we are inclined to quash all the impugned orders as shown in the captioned appeals. - Decided in favour of assessee
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2019 (11) TMI 1139
Allowability of depreciation on goodwill generated on acquisition of businesses - HELD THAT:- Merely because tangible business movable assets were included by assessee in its books of accounts at the book value existing in the books of GTS/Arc on effective date will disentitle assessee from claiming depreciation on the excess consideration paid over and above book value of tangible assets acquired of GTS/Arc. The representations and warranties are made by GTS/Arc to the assessee vide these agreements that their books of accounts and records reflect true and correct state of affairs and for making false/wrong representation/warranties by the sellers, the consequences are provided in these agreements. We donot find any reasons to doubt the value of these tangible movable assets acquired by the assessee and the value incorporated in books of accounts by the assessee in our view reflect their fair market value, unless rebutted by Revenue. Revenue has also not done any exercise to valuing these tangible movable assets acquired by the assessee to rebut contention of the assessee that book value of these acquired tangible assets represent fair market value of these assets. AO has proceeded on wrong notion that the assessee acquired companies namely GTS/Arc or acquired their entire assets and liabilities which is not correct .The assessee has discharged its primary onus and now it was for Revenue to have brought on record incriminating material to rebut the contentions of the assessee and in the absence of any cogent incriminating material on record , we reject this contention of the Revenue and hold that book value of these tangible movable assets acquired by assessee was indeed their fair market value. The excess paid by assessee over and above book value of tangible movable assets(net of liabilities) acquired is definitely towards intangibles assets acquired by assessee in the form of business contracts, customer orders, customers, business information, right to continue business as going concerns, non compete by GTS/Arc/key employees etc. Thus consolidated payments made by assessee over and above net assets acquired by it under a composite contract in the present case before us, in our considered view is towards goodwill and non compete agreement by GTS/Arc and its key employees and in our considered view depreciation is allowable both on the aforesaid excess amount paid towards goodwill and non compete agreement. Our aforesaid view is supported by case of Pentasoft Technologies Limited [ 2013 (11) TMI 1057 - MADRAS HIGH COURT] . We have observed that co-ordinate Bench of Chennai-tribunal in the case of M/s. Rentokil India Private Limited v. DCIT [ 2017 (11) TMI 1862 - ITAT CHENNAI] has allowed depreciation on the intangible assets viz. goodwill/customer list . The co-ordinate Bench of this tribunal in Rentokil [ 2017 (11) TMI 1862 - ITAT CHENNAI] referred to Explanation to Section 92B of the 1961 Act to hold that intangible shall include customer list and depreciation shall be allowable u/s 32. We hold that Ld.CIT(A) has rightly allowed depreciation claimed by the assessee. The decision of Hon ble Supreme Court in the case of Smifs Securities Limited [ 2012 (8) TMI 713 - SUPREME COURT] also support the contentions of the assessee that goodwill is an asset under explanation 3(b) to Section 32(1) and depreciation shall be allowable on goodwill - Decided in favour of assessee.
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2019 (11) TMI 1138
Penalty u/s 271C - non-deduction of tax at source on LTC - assessee-bank has failed to deduct TDS but in proceedings u/s 201 of the Act, the assessee has accepted the claim and paid the amounts - HELD THAT:- The fact that non-deduction of TDS has come out in the survey operations u/s 133A of the Act. We found that the assessee has not deducted TDS and explained reasonable cause in the penalty proceedings and the assessee s action is not wanton but on a bona fide belief. As decided in SYNDICATE BANK, NGV KORAMANGALA, BANGALORE, SYNDICATE BANK, NGV YELHANKA, BANGALORE, SYNDICATE BANK, GANGANAGAR, BANGALORE [ 2019 (7) TMI 1266 - ITAT BANGALORE] the mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty. - Decided in favour of assessee.
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2019 (11) TMI 1137
Exemption u/s 54F - whether really the assessee invested the amount in purchase of the property before the expiry of the period prescribed under section 54F ? - HELD THAT:- Agreement dated 30.3.2012and the sale deed dated 9.7.2015 do not rule out the possibility of the parties bringing such documents into existence as a result of an afterthought, the doubt rightly entertained by the authorities below. Doubt entertained by the authorities below is well corroborated by the conduct of the parties themselves, inasmuch as neither the sale of plot nor the purchase of flat is declared by the assessee either in her capital gains or by way of claiming exemption under section 54F. So also, there is no denial of the fact recorded by the learned Assessing Officer that the examination of the income tax return filed by Smt. Jaspreet Kaur established that she had not declared any capital gains under the head capital gains either longterm or short-term and also, she has not shown any income derived from the business or profession, if at all it has to be taken that Smt. Jaspreet Kaur carried on any business as a builder as claimed by the assessee. The statement of the assessee is not supported by her conduct.In this set of facts and circumstances, we are not inclined to believe the genuineness of the agreement to sell dated 30.3.2012. If this agreement is taken out of consideration, there is nothing on record to suggest that at any time prior to 9.7.2015, the assessee invested the amount for purchase of the residential house or that she had taken possession thereof within the time stipulated for the purpose of investment under law. It is unsafe to place reliance on the agreement of sale dated 30.3.2012 to hold that as on such date there was a transaction of purchase of the entire ground floor of the property or that any amount was paid under such an instrument on that day, but only because the basic structure of the building was not complete as on the date, possession was taken subsequent to the expiry of the period of 3 years when the sale deed dated 9.7.2015 was executed. With this view of the matter, we do not find anything illegal in the conclusions reached by the authorities below. - Decided against assessee.
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2019 (11) TMI 1136
Levy a penalty u/s 271G - default of non-submission of documents within stipulated period as required under section 92D(3) prior to the amendment in section 271G of the Act by Finance (No.2) Act, 2014 effective from October 1, 2014 - HELD THAT:- Penalty u/s 271G is leviable for omission or commission of the wrongful act in accordance with the law applicable on the date of such commission or omission. So, we are of the considered view that on the date of non-compliance of the notice as required under section 92D (3) i.e. October 23, 2013, only AO was having the power to levy the penalty u/s 271G and not the TPO. So, the penalty levied by the TPO vide order dated 27.04.2015 and confirmed by the CIT (A) by passing the impugned order is not sustainable in the eyes of law. Even on merits, the penalty levied by the ld. TPO and sustained by the ld. CIT (A), is not sustainable because undisputedly assessee has submitted documents on the basis of which ld. TPO has proposed the adjustment and no prejudice whatsoever is caused to the Revenue. Hon ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] held that, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed the statue, the competent authority may not impose the penalty. Though there is a delay on the part of the assessee to file the requisite documents but ultimately documents have been filed and assessment has been framed and moreover no malafide on the part of the assessee not to comply with the provisions contained under section 92D (3) has come on record and as such, penalty levied in this case is not sustainable on merits also. Penalty levied by the TPO and confirmed by the CIT (A) is not sustainable on account of jurisdictional error, hence penalty order is quashed - Decided in favour of assessee.
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2019 (11) TMI 1135
Penalty u/s 271(1)(c) - unexplained cash credit u/s. 68 - payment of interest to bank which the assessee has mentioned in the profit and loss account - HELD THAT:- The revenue authorities have noticed that a loan (liability) against which the assessee has claimed interest and the Assessee has further given interest free loan to his daughter Ms. Mehak Gandhi meaning thereby that assessee has claimed interest expenses of borrowed capitals and by giving interest free advances to his daughter. In my view this not for business purposes. Assessee has claimed before the revenue authorities by not filing any documentary evidence, therefore, fully agree with the reasons mentioned by the revenue authorities especially the Ld. First Appellate Authority for confirming the addition on account of interest on loan. Hence, no interference is called for in the well reasoned order of the Ld. CIT(A) on the issue in dispute, therefore, I uphold the finding of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the assessee. Addition on account of credit card payment - Expenses on ICICI Credit Card and the credit facility from Phoenix ARC Pvt. Ltd. was transferred by the assessee to his capital account. Since the assessee has himself capitalized these amounts by transferring the same to his capital account without crediting the same in the profit and loss account. Impugned order passed by the FAA AO has rightly made the addition in dispute and Ld. CIT(A) has confirmed the same on the basis of the documentary evidences produced by the assessee. Therefore, the finding of the Ld. CIT(A) on this issue is upheld and accordingly the ground raised by the assessee is rejected. Accordingly, this appeal of the assessee is dismissed.
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Customs
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2019 (11) TMI 1134
Proceedings against the officers for seeking bribe - Requirement of approval of competent authority before commencement of enquiry - non-adherence to Section 17A of the Prevention of Corruption Act,1988 - Proviso to Section 17A of the PC Act - there is prima facie material relating to demand of a sum of Rs.ten lakhs through electronic evidence like video graphy. - HELD THAT:- In view of the video graphy evidence relating to demand, Section 17A of PC Act is required to be taken into consideration that where the charge is of attempting or accepting any undue personal advantage for himself or for any other person. In such an event, Section 17A of the PC Act relating to obtaining prior approval of the competent Authority before initiating any proceeding against public servant may not require. Therefore, petitioners contention that there is non-compliance of Section 17A of PC Act is not tenable having regard to the fact that there is prima facie material evidence relating to demand of bribe of Rs.ten lakhs - Hence, question of obtaining prior approval under Section 17A of the PC Act is not warranted in view of first proviso. Petition dismissed.
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2019 (11) TMI 1133
Revocation of Customs Broker (CB) License - forfeiture of security deposit - Time Limitation - illegal import of goods - case of appellant is that since the department has not followed the time limit prescribed in the Regulations which is mandatory, the order of revocation of license cannot sustain - HELD THAT:- In the present case, the offence report is dated 11.6.2018. However, Show Cause Notice has been issued on 14.9.2018 which is beyond the period prescribed in Regulation 20. Similarly, the proceedings for revocation have been completed beyond the period of nine months and the order for revocation has been issued on 23.5.2019 which is against the Board Circular 9/2010. Sub-clause (5) of Regulation 20 states that a report of inquiry shall be submitted within a period of 90 days from the date of issuance of the Show Cause Notice under sub-Regulation (1) - In the present case, the Show Cause Notice was issued on 14.9.2018 and the inquiry report was submitted only on 21.2.2019 which is beyond 90 days prescribed in sub-regulation (5). The Hon'ble High Court in the case of SANTON SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2017 (10) TMI 621 - MADRAS HIGH COURT] had occasion to consider whether the time-limit prescribed in the Regulation for proceedings of revocation of license is mandatory or directory. It was held that non-compliance of the time limit prescribed in the Regulation is fatal and the order of revocation of license passed without complying with the time limit cannot sustain. Merits of the case Regulation 10(d), (e) and (n) of CBLR, 2018 r/w CBLR, 2013 - Regulation 10(d), (e) and (n) of CBLR, 2018 r/w CBLR, 2013 - case of department is that appellant allowed Shri A. Sathish to use their Customs Broker license as well as to use the login id so as to facilitate illegal imports - HELD THAT:- There is no evidence adduced by the department to show that the appellant had allowed other persons to use their license and login id. Apart from a bald statement in the Show Cause Notice, there is nothing on record to prove these allegations - When the KYC details have been obtained, the appellant cannot be found fault alleging that he did not directly meet the IEC holder before filing the Bill of Entry or doing any such transaction as Customs Broker. In KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT] observed that it would be far too onerous to expect the CHA to inquire into and verify the genuineness of IE Code given to it by a client for each import / export transaction. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (11) TMI 1132
Rejection of request of changing the old name of the company over the property owned by him - rectification of name of company - alteration of memorandum - HELD THAT:- Sub-section (2) of Section 16 of the Companies Act, 2013 clearly provides where a company changes its name or obtains a new name under sub-section (1), it shall within a period of fifteen days from the date of such change, give notice of change to the registrar along with the order of the Central Government, who shall carry out necessary changes in the certificate of incorporation and the memorandum. Since all the formalities have been completed we find that there is no reason for the respondents not to permit the petitioner to change the name of the company in the record from Shaz Investments Private Limited to Shaz Housing Private Limited. The respondent nos. 3 and 4 are directed to reconsider the application of the petitioner for changing the name of the company in the record from Shaz Investments Private Limited to Shaz Housing Private Limited - petition allowed.
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2019 (11) TMI 1131
Condonation of delay - Period of limitation - supply for Transfer of Shares and Rectification of Register - case of appellant is that the Adjudicating Authority had failed to appreciate that the statutory prescribed time period to supply for Transfer of Shares and Rectification of Register is 60 days from the date of receipt of refusal or in case no notice of refusal was transmitted by the Company, within a period of 90 days from the date of which the Instrument was transferred was delivered to the Company. HELD THAT:- While dealing with an Application for condonation of Delay , the concerned Tribunal / Appropriate Authority is only required to consider whether the Plea of Sufficiency of Cause is a reasonable one or otherwise, of course after taking into consideration of the facts and circumstances of a given case. Undoubtedly, consideration of an existence of a Sufficient Cause is within the ambit of the concerned Authority, which has to be exercised based on sound judicial principles - It cannot be gain said that Right to refuse registration of transfer of shares, Sufficient Cause is question of law and the cause shown for refusal is sufficient or otherwise in a given case, can also be a mixed question of law and fact. Besides this, a refusal may be on the basis of Breach of Law or any other Sufficient Cause . One cannot brush aside a vital fact that in Law, a Lis is to be decided on merits and no party should be non-suited harping on technicalities and also by adopting a pedantic approach. - There is no two opinion of the fact that although Day-Today explanation for Condonation of Delay is not necessary, but Sufficiency of Reason must exist. In the instant case, this Tribunal comes to a consequent conclusion that the Tribunal had borne in mind the well settled principal in Law that when the matter is fought on merits , the same is to be disposed of in accordance with law etc - appeal dismissed.
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Securities / SEBI
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2019 (11) TMI 1120
Acquisition of 5 per cent and more shares or voting rights of a company - manipulative orders in a short time - the appellant s strategy was to purchase bulk of the shares at a lesser market price. Thereafter, he used to place buy orders on the opening of the market at much higher price than the LTP for small number of shares some time one share only. Once that order got executed then he used to sell his stock at a higher price - Violation of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ( SAST Regulations ) and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 ( PIT Regulations ) - whether the transfer of shares were infact acquisition attracting the provisions of SAST Regulations and eventually PIT Regulations or the transaction was merely a pledge ? - HELD THAT:- the issue of effect of exoneration of the counter parties is immaterial. It is true that synchronized trades or self trades in itself without any motive may not be called manipulative trade practices. In the present case, however the pattern as highlighted above would go to show that the present appellant Tarun Kumar with a view to gain, indulged into trading in a fraudulent manner as detailed supra. In our view the order of the Adjudicating Officer in this regard therefore cannot be faulted. Acquisition of shares accounted for 16.77% of the total shareholding - The case of all the appellants in this regard is that they had not acquired shares. - They executed agreement for pledge of the shares with these two appellants as a security towards finance to be raised. - Held that:- Regulation 7 provides for disclosures even in case of pledge to private individual, the transaction in question for public in general and market was change in the shareholding pattern. The term pledge was nowhere put either in the transfer account of the promoters or depository account. In that view of the matter, the violations of the Regulations is clearly ruled. As regards the quantum of penalty the learned counsel for the appellant submits that the magnitude of the offence is required to be considered while awarding compensation in criminal cases. He further submitted that the appellant ought to have been heard on quantum of compensation. On the other hand, learned counsel for the respondent rightly submits that the present case cannot be branded as criminal case. He points to the reasoning forwarded by the Adjudicating Officer in the impugned order in this regard. He submits that the fraudulent practices of appellant Tarun Kumar in trading the shares of Rajratan and not making disclosure as well as nondisclosure of acquisition of shares of Velan Hotels Ltd. and public announcement to acquire the shares would amount to deprivation of fair treatment of the shareholders who are affected by the change in control. In the circumstance, he submitted that the penalty of ₹ 15 lakhs imposed upon appellant Tarun Kumar for violation of PFUTP Regulations, ₹ 25 lakhs on the appellants jointly and severally for violation of Regulation 10 read with Regulation 14 of the SAST Regulation and of ₹ 6 lakhs on appellant Tarun Kumar and Jinesh for violation of Regulation 13(1) of PIT Regulations and Regulation 7(1) of the SAST Regulations was justified. He further supports the penalty imposed upon the appellant Jinesh of ₹ 4 lakhs for violation of Regulations 13(3) and 13(5) of the PIT Regulations. Considering all the material on the record, in our view the discretion exercised by the Adjudicating Officer needs no interference in this regard also. In the circumstances, the appeals are hereby dismissed.
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Service Tax
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2019 (11) TMI 1130
Import of services - Reverse charge mechanism - Service rendered by the intermediary bank (foreign bank) - Bank Guarantee Commission - realisation charges - contentions of the petitioner is that they have not received the service of the foreign bank at Iraq or the intermediary bank situated outside this country directly and therefore, the petitioner is not bound to pay service tax in respect of the service rendered by those banks for the purpose of furnishing bank guarantees. Whether the petitioner or their Banker namely Indian Bank, Adyar, is liable to pay the same in respect of the service rendered by intermediary Bank as well as the Banker at Iraq which furnished the Bank Guarantee to the supplier of the petitioner? HELD THAT:- In this case, there is no dispute to the fact that the petitioner's bank in this country namely Indian Bank, Adyar has not furnished the Bank Guarantee to the foreign supplier of the petitioner. On the other hand, the Indian Bank approached the intermediary Banks which are admittedly located outside this country, which in turn approached the bank situated in Iraq only for the purpose of furnishing Bank guarantee on behalf of the petitioner to its foreign supplier at Iraq - Therefore, there is no doubt that though the event of furnishing the bank guarantee had taken place in three parts, the chain of events connecting those three parts will undoubtedly lead to an irrebuttable conclusion that all those three events were aimed only to provide the service to the petitioner, namely furnishing of Bank guarantee to its foreign supplier. The petitioner had incurred expenditure in foreign currency towards Bank Guarantee Commission and export proceeds realisation charges paid to the intermediary Banks situated outside India. Certainly, a taxable service has been provided to the petitioner namely, Banking or other financial services. It is the categorical finding of the authorities who passed the impugned orders that taxable service by way of issuing bank guarantee to the petitioner's customer at Iraq and by way of remitting the exports proceeds to the petitioner, had been performed by the intermediary banks for the petitioner - the petitioner cannot claim that they are not the recipient of the service. At no stretch of imagination, it can be said that the petitioner's Bank at Chennai, namely, Indian Bank, Adyar, is recipient of the Service provided by the intermediary Bank or the foreign bank situated in Iraq. Needless to say that the Indian Bank, Adyar, namely, the banker of the petitioner has facilitated the service to be rendered by the intermediary Banks and the foreign Bank in Iraq only for the purpose of providing bank guarantee on behalf of the petitioner. Therefore, the petitioner is not justified in shirking its liability to pay service tax relatable to the Bank Guarantee Commission and realisation charges involved in this case. Petition dismissed - decided against petitioner.
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2019 (11) TMI 1128
Principles of natural justice - mining services - production of oil services - Survey and Exploration - only point raised before this Court is that the Adjudicating Authority has not considered those two Circulars viz., Circular No.32/06/2018 GST and Circular No.35/2018 GST dated 12.02.2018 and 05.03.2018 respectively, which according to the petitioner are in their favour. HELD THAT:- There is no dispute to the fact that as against the present order passed by the first respondent, a statutory appellate remedy is available before the CESTAT and therefore, all the factual contentions raised by the petitioner by relying on those two Circulars can very well be raised before the Appellate Tribunal, which, undoubtedly, also a fact finding authority, will have to go into the merits of the contentions raised by the petitioner and decide as to whether the Adjudicating Authority has in fact considered the effect of such Circulars while passing the impugned order or not, even though, those two Circulars were not referred to in the impugned order. When such remedy is available to the petitioner and more particularly, when this Court finds that the dispute raised in this writ petition by relying on those two Circulars cannot be considered and decide without going into the factual aspects of the matter, the petitioner has to only resort to the statutory appellate remedy by filing regular appeal before the CESTAT - this writ petition is disposed of only by granting liberty to the petitioner to file such appeal within a period of four weeks from the date of receipt of a copy of this order before CESTAT. Petition disposed off.
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Central Excise
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2019 (11) TMI 1126
Re-credit of excess duty debited on CIF value, for export - rebate of duty paid on finished goods - Rule 18 read with N/N. 19/04-CE (NT) dated 6.9.2004 - HELD THAT:- It is accepted by the Revenue, as pointed out by the Department from para 6 of the order-in-original, that appellant is entitled to refund of the excess paid duty, which is in the nature of deposit with the Government - in view of the law laid down by the Madras High Court in M/S. ICMC CORPORATION LTD. VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2014 (1) TMI 1473 - MADRAS HIGH COURT] wherein an assessee is entitled to take re-credit of the undisputed amount and have taken the credit under intimation to the Department. The proceeding for disallowing the same is unwarranted and there is no requirement to file a separate application for refund of duty under Section 11B of the Act. The Commissioner (Appeals) in the impugned order have erroneously rejected the appeal observing that the appellant assessee have taken suo motu credit without any valid duty paying documents. This observation is factually wrong, vitiating the impugned order. Further, it is found that the impugned order is cryptic and non speaking. The appellant have rightly taken cenvat credit under intimation to Revenue - appellant shall entitle to consequential refund in terms of Section 142(3) of the Central Goods and Services Tax Act, 2017 - Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 1125
Valuation - inclusion of cash discount in the assessable value - the cash discount is declared on the invoice, even though in some cases the discount was not availed by the buyer and the same was not passed on - HELD THAT:- Since on the very issue in the appellant s own case has been decided by this Tribunal in M/S. GUJARAT GUARDIAN LTD VERSUS C.C. E-BHARUCH [ 2019 (8) TMI 869 - CESTAT AHMEDABAD ] wherein various judgments including the Tribunal s Larger Bench s judgment and Hon ble Supreme Court s judgment in the case of Purolator India Ltd. [[ 2015 (8) TMI 1014 - SUPREME COURT ] were relied upon and the appeal of the very same appellant was allowed. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 1123
CENVAT Credit - input services - GTA Services - the service used for removal of goods wherein the sale is on FOR basis - HELD THAT:- The fact is no under dispute and all the documents related to the said fact has been submitted before the original authority which has been taken into consideration - As per the facts, the sale is on FOR basis, freight was borne by the appellant for clearance of the goods and the same is included in the assessable value on which excise duty is discharged. Under the same set of facts this Tribunal in the case of Ultratech Cement vs CCE Kutch [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD ] after considering the Hon ble Supreme Court judgment in the case of Ultratech Cement [ 2018 (7) TMI 1574 - SC ORDER ] allowed the credit. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 1122
CENVAT Credit - input services - GTA Services - the service used for removal of goods wherein the sale is on FOR basis - HELD THAT:- The fact is no under dispute and all the documents related to the said fact has been submitted before the original authority which has been taken into consideration - As per the facts, the sale is on FOR basis, freight was borne by the appellant for clearance of the goods and the same is included in the assessable value on which excise duty is discharged. Under the same set of facts this Tribunal in the case of Ultratech Cement vs CCE Kutch [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD ] after considering the Hon ble Supreme Court judgment in the case of Ultratech Cement [ 2018 (7) TMI 1574 - SC ORDER ] allowed the credit. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (11) TMI 1129
Estimation of turnover - Intimation regarding starting or closure of firing (Phukai) - Whether there is any requirement under U.P. Trade Tax Act or Rules framed thereunder which makes it mandatory for a brick kiln owner to inform the department about the starting or closure of firing (Phukai)? - HELD THAT:- No doubt none of the counsel for the contesting parties could point out any such provision in the Act, 1948 mandatorily requiring the assessee to inform the Assessing Officer about the closure of Brick Kiln, however, the Court finds merit in the submission of Mr. Shukla that any prudent businessman would, in order to avoid tax liability, give such intimation to the Assessing Officer. Whether in the absence of any such provision making it mandatory for Brick Kiln owner to inform the Department about the stopping of firing (Phukai) the findings recorded by the Department and the Tribunal regarding the period for which the Brick Kiln was run, is sustainable in law or perverse? - HELD THAT:- It is not out of place to mention that even if there is no requirement in the Act, 1948 for the assessee to intimate the Assessing Officer about the closure of Brick Kiln as already stated in the context of Question No. 1 any prudent person would inform the Assessing Officer in this regard to avoid tax liability. Furthermore, if, he does not do so then the burden is upon him to show that the Brick Kiln was not functional after the alleged date of closure. No such evidence was led by the revisionist whose accounts were rejected which has not been put to challenge - the Court does not find any error in the findings of the Assessing Officer as affirmed by the Tribunal. The findings of the First Appellate Authority were clearly perverse based on conjecture and surmises. The Tribunal's order does not suffer from any error. Revision dismissed.
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2019 (11) TMI 1127
Rectification of order - Adjustment of balance unallowed amount of tax exemption, as against the petitioner s tax liability - Karnataka VAT Act - Time limitation - HELD THAT:- The petitioner has not raised any objections/claims regarding the entitlement certificate with respect to the KST regime and the assessment orders were passed for the assessment years 2000-01 to 2004-05. It is only in the year 2018, the rectification of the assessment orders has been sought. The assessment orders having reached finality, the Assessing Authority has rightly observed that the clarification of tax exemption under the KST Act cannot be considered. In view of the assessment orders relating to the tax periods herein having reached finality and the revised entitlement exemption certificate as well as the revised tax exemption certificate being unchallenged, the order of this Court in W.P.No.47236/2013 having duly complied by the respondent authority, no request made by the petitioner to adjust the unallowed amount can be considered by the respondent authority at this stage. Moreover, such claim is barred by limitation. Petition dismissed.
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Wealth tax
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2019 (11) TMI 1124
Wealth escaping assessment - Lack of jurisdiction of ACIT, Circle-9(1), Bengaluru who issued notice u/s 17 of WT Ac t - HELD THAT:- We find merits in the submissions made on behalf of the assessee that the validity of notice issued under section 17 of the Act is primarily required to be adjudicated before a decision can be rendered on the merits of the additions made in the assessment. Under section 124 of the Income Tax Act, 1961 when a challenge to jurisdiction is raised, it is incumbent on the part of the AO to adjudicate the same or he has to make reference of the issue of determination of jurisdiction to the authorities specified under section 124(2) of the Income Tax Act, 1961. In the light of the above statutory provisions, we are of the view that it is incumbent on the part of the CWT(A) to have adjudicated on this issue CWT(A), in the impugned order, has not addressed the issue at all and has proceeded on the basis that the reasons for reopening were valid without going to the question as to who formed the belief regarding escapement of wealth chargeable to tax and who subsequently continued the proceedings under section 17 of the Act and whether they authority in law to do so. In our opinion, these issues are very vital and since these issues are not been adjudicated by the CWT(A), we deem it fit and proper to set aside the order of the CWT(A) and remand the question of validity of initiation of reassessment proceedings under section 17 of the Wealth Tax Act, 1957 to the CWT(A) for fresh consideration, after due opportunity of being heard afforded to the assessee.
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2019 (11) TMI 1121
Net Wealth determination - valuation of property - Fair market value versus Circle rate - It was submitted that, assessee was not even in a position to avail the loan against this property, as the said land had encroachments on it - HELD THAT:- In the absence of production of any material in support of the assessee s contentions, the AO has adopted the circle rate available in www.tnreginet.net as the market value and assessed the value for each of the impugned assessment year. The ld.CWT(A) has held that the assessee canvassed certain factors for adoption of lower value, however, he has not proved either to the satisfaction of the AO or to the satisfaction of the ld CWT(A) that what is canvassed by him is the fact and hence he upheld the action of the AO for the assessment years 2007-08 to 2012-13, respectively. Even before us also, the assessee has not placed any material in support of his contentions. Therefore, we do not find any reason to interfere with the orders of the ld.CWT(A), supra, and hence dismiss all these assessee s appeals.
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