Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 4, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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The contract between the main contractor and the Government entity is for the supply, design, erection, transmission and commissioning of different capacity of transformers & 11 KV lines and industrial electrification works, Networking & Automation Apartments /complex, Electrical works and allied services, liable for GST @18%
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Generation of waste - Job work - applicability of GST - any waste and scrap generated during the job work may be supplied by the registered job worker directly from his place of business on payment of tax, or by the principal if the job worker is not registered.
Income Tax
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Withholding of the refund u/s 241A - AO has not given due regard to the facts of the case and he has not applied his mind as to why the refund is likely to adversely affect the revenue. There are no reasons recorded in writing by him to justify withholding of the refund due to the petitioner in terms of Section 143(1) - Matter restored before AO.
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Penalty u/s 271B - not getting account u/s 44AB - The action of the AO in treating the unaccounted turnover as part of total turnover and holding the assessee liable for paying penalty u/s 271B of the Act for not getting books of account audited, is not sustainable.
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Deduction on account of washout charges - cancellation of expired contract - The permission had been awarded by the RBI, consequent to which only the assessee made the payment to LD Asia. - Claim of deduction allowed.
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Disallowance of medical expenses incurred on treatment of one of the Director - The assessee was required to deduct tax at source on the said amount of perquisite, which was part of the salary as defined u/s 17(2) - Additions confirmed.
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TDS u/s 194H - disallowance of salary expenditure by treating it as commission paid for selling goods - When the assessee had furnished the details of the payment to his employees it cannot be simply rejected without verifying the facts.
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Capital gains computation u/s 48 - deduction of interest as part of cost of acquisition from full value of sale consideration - We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset.
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Exemption u/s 54F - purchase of residential land - Nursing Home was constructed in addition to the residential house - No force in the argument that exemption is available for the entire land on which construction in respect of residential house as well as commercial building being nursing home have been done.
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Just because by shifting the head of income, the assessee would be hit by tax liability cannot be ground enough for shifting the capital gains disclosed by the assessee to the business head, especially when the property has been shown as an investment by the assessee and the same has also been clearly demarcated.
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Capital gain computation - fair market value u/s. 50C - we accept the contention of the assessee that it is a distress sale and assessee was constrained to sell the property to none other than the Respondent in the Civil Suit and therefore, the property could not have been sold at the fair market value. Appeal of the assessee is allowed.
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Addition of purchase expenses in cash u/s.40A(3) - the credit balance of the parties were transferred to the partners account and partners in turn settled the claims of the parties in cash - what is not directly permitted cannot be indirectly permitted.
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VDIS - identification of jewellery declared - Tribunal committed a serious error in arriving at a conclusion that items sold by the respective appellants were different from the jewellery declared under the VDIS and as such the substantial questions of law deserves to be answered in favour of the assessees
Customs
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Imposition of penalties u/s 112 (b) and 114AA On CHA - there is no element of mens rea or conscious knowledge which can be attributed to the CHA - CHA acted bona fide and merely facilitated the imports on the strength of the documents which were handed over to him by the importer -There is no sufficient material to impose penalty.
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Imposition of penalties on CHA u/s 114(i) of Customs Act, 1962 - The sole allegation against the ‘Custom House Agent’ is that they allowed unauthorized use of their licence - a proposition, which fails the test of reasonableness, must be corrected by evidence but a statement of retraction does not have to be - No penalty.
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Maintainability of appeal of the Revenue in terms of Section 129D of CA - the proper officer who has been entrusted with the job for filing the appeal should only sign the appeal records including the verification memo contained in the appeal memorandum
State GST
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User Acceptance Testing of New Returns Offline Tool and online version of Form GST ANX-1 and Form GST ANX-2.
Indian Laws
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Guilty of professional misconduct on the part of Chartered Accountant - the petitioner had made all efforts to dissuade other Chartered Accountants from taking up the assignment to audit the accounts of TIL. This, clearly, is not the object of requiring an auditor to correspond with the previous auditor. - The language of the letters sent by the petitioner and the threats held out do no credit to the profession.
IBC
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Initiation of CIRP - financial service provider, including an NBFC, is excluded from the definition of a corporate person and CD - no creditor can seek initiation of corporate insolvency resolution process against any financial service provider.
Service Tax
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Refund claim - time limitation - Section 11B - The doctrine of merger applicable to the case on hand - the view of the respondent-revenue in denying the refund claimed by the appellant is unjustifiable and hit by Article 265 of the Constitution of India.
Central Excise
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CENVAT Credit - appellant was acting in dual capacity i.e. as manufacturer and also service provider - Merely because the appellant themselves are the paint manufacturers and raised invoices in their own name but for HPCL site, they cannot be denied the Cenvat credit of duty paid by them.
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CENVAT Credit - input services - Repair and maintenance services - AMC services - the works contract services pertain to either maintenance of office equipment or cleaning of carpets, etc., which were used at the head office - credit allowed.
Case Laws:
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GST
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2019 (11) TMI 113
Classification of supply - contract for 'Design, Realisation, Integration and Commissioning of 1.2m Trisonic Wind Tunnel at Vikram Sarabhai Space Centre, ISRO, Thiruvananthapuram - eligibility for the concessional rate of GST under Sl.No.243A of First Schedule of Notification No.01/2017 Integrated Tax (Rate) dtd.28-06-2018 - works contract or not - whether covered under Entry Sl.No.3 of Notification No.08/2017 Integrated Tax (Rate) dtd.28-06-2017 as amended by Notification No.24/2017 Integrated Tax (Rate) dtd.21-09-2017 attracting GST at the rate of 12%? HELD THAT:- The 1.2m Trisonic Wind Tunnel that is finally commissioned is an immovable system for test set up to be used purely for Research and Development purpose to design Launch Vehicle and Re-entry Space Craft. On commissioning of the project, the civil work as well as the machinery and equipments inside become an integral and inseparable system. As the installation and commissioning of the 1.2m trisonic Wind Tunnel includes works of civil structural, engineering, fabrication; procurement, electrical, pipelines and fire fighting systems, overall integration of the systems, commissioning, performance testing and training it is clear that the work will fall under the definition of works contract under Section 2 (119) of CGST Act, 2017. The activity being a works contract awarded by the Central Government Department by .way of construction, erection, commissioning, installation, completion, fitting out, of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession will attract 12% GST as per Sl.No.3 (vi) of Notification No.08/2017 Integrated Tax (Rate) dated 28.06.2017 - In this case, VSSC is undertaking the activity of research and development to design Launch Vehicle and Reentry Space Craft as a public authority.
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2019 (11) TMI 112
Classification of goods - rate of tax - Bentonite Powder - competitors are selling the Bentonite Powder @ 5% (in electrical shops for earthing purpose) - HELD THAT:- Bentonite in crude form or processed form is covered under HSN 2508 - Other clays (not including expanded clays of heading 6806), andalusite, kyanite and sillimanite, whether or not calcined; mullite; clamotte or dinas earths and as such is used as a binding agent in the manufacture of iron ore in the steel Industry. It is also used for piling; whereas the Bentonite used as filling compound for electrical earthing usually consist of mixture of Bentonite powder, Wood charcoal powder, Graphite powder, Sodium Sulphate etc. The earthing compound absorbs moisture from the surrounding soils reducing the contact resistance and in turn effectively increasing the Size of the Copper earth rods installed and buried in the cable trench. As it is a compound used as surface tension reducing agent; it squarely falls under Heading 3824 - Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products) not elsewhere specified or included - Sub -Heading - 3824 99 17 - Surface tension reducing agents and attract GST at the rate of 18% as per SI No. 97 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. The Gujarat Authority for Advance ruling has in RE : M/S. DOCSUN POWER PVT. LTD. [ 2018 (6) TMI 704 - AUTHORITY FOR ADVANCE RULING, GUJARAT] ruled that Back Fill Compound is classifiable under Tariff Heading 3824. It is stated that Back Fill Compound is obtained by mixing Bentonite powder, Wood charcoal powder, Graphite powder and would not fall under Tariff Heading 2508. Mixture of Bentonite powder used for earthing purpose is liable to GST at the rate of 18%.
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2019 (11) TMI 111
Rate of tax - composite supply of works contract - clause (119) of Section 2 of Central Goods and Services Act, 2017 - whether the GST rate 18% or 12% is to be charged by the supplier? - applicability of N/N. 11/2017-Central Tax (Rate) dated 28th June 2017 as amended by various notifications - HELD THAT:- The nature of the contract between the applicant and the main contractor is verified. It is seen that the sub-contracts are covered under the item no. (ix) of SI.No. 3 of the Notification No. 1 1/2017 -Central Tax (Rate) dated 28.06.2017 and this is with effect from 25.01.2018. Earlier to this, the nature of the service provided by the applicant to the main contractor was covered under item no. (ii) of the SI.No. 3 of the Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 taxable at 9% under CGST Act and 9% under SGST Act. The contract between the main contractor and the Government entity is for the supply, design, erection, transmission and commissioning of different capacity of transformers of 220 KV, 110 KV, 66 KV, 33 KV, 11 KV lines and industrial electrification works, Networking Automation Apartments /complex, Electrical works and allied services and this supply is neither covered under item (iii) or item (vi) and hence the supply of services by the applicant is not covered under item no. (ix) and hence gets covered only under item (ii) of the SI.No. 3 of the Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 taxable at 9% under CGST Act and 9% under SGST Act.
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2019 (11) TMI 110
Rate of GST - professional / job works charges to be paid by the applicant - Restriction under GST laws - Documents or formats to be maintained by the applicant - Generation of waste - HELD THAT:- The rate of GST applicable is 18% as per Si No. 26 (iv) - Manufacturing services on physical inputs (goods) owed by others, other than (i), (ia), (ii), (iia) and (iii) above of Notification No. 11/2017 Central Tax (Rate) dated 28,06.2017. Restriction under GST laws - rate of GST - supply of raw materials to the job work unit and get the finished goods to the applicant from the job work unit as per the required design and supervision of the engineers of the applicant - HELD THAT:- As per Section 143 of the CGST/SGST Act, 2017; the registered principal may, without payment of tax, send inputs or capital goods to a job worker for job work and, if required, from there subsequently to another job worker and so on. Subsequently, on completion of the job work, the principal shall either bring back the goods to his place of business or supply the same directly from the place of business / premises of the job worker within one year in case of inputs or within three years in case of capital goods. Documents or formats to be maintained by the applicant under GST laws - transfer of raw materials to the job work unit - processing and return of finished goods from the job work unit to the applicant or despatch of finished goods from the job work unit directly to the destination of the applicant s customers - HELD THAT:- As per the provisions of Section 143 (1) of the CGST Act, 2017 the principal can supply goods directly from the place of business / premises of the job worker to its end customer. The supply of goods by the principal from the place of business / premises of the job worker to the end customer will be regarded as supply by the principal and not by the job worker. If the job worker is not registered then the principal shall declare the place of business of the job worker as his additional place of business - As per Rule 45 of the CGST/SGST Rules, 2017; the inputs, semi-finished goods or capital goods shall be sent to the job worker and received back by the principal under the cover of a delivery challan containing particulars as prescribed in Rule 55 ibid issued by the principal, including where such goods are sent directly to a job worker. The principal is required to file FORM GST ITC-04 every quarter furnishing the details of the goods sent for job work. Change of rate of tax - consumables like paints primers and consumable spares like locking ring are arranged by the job work unit - HELD THAT:- The job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work - The job worker, as a supplier of services, is liable to pay GST at the applicable rate. The job worker shall issue an invoice at the time of supply of the services determined in terms of Section 13 read with Section 31 of the CGST/SGST Act. The value of services would be determined in terms of Section 15 of the CGST/SGST Act and-would include not only the service charges but also the value of any goods or services used by him for supplying the job work services. The use of own goods by the job worker in addition to the goods supplied by the principal for job work will not change the nature of the activity and will have no bearing on the rate of GST applicable for the job worker. Is there any tax liability on the applicant under GST laws on the value of the scrap held with the job work unit? - HELD THAT:- As per sub-section (5) of Section 143 of the CGST/SGST Act, 2017; any waste and scrap generated during the job work may be supplied by the registered job worker directly from his place of business on payment of tax, or by the principal if the job worker is not registered.
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2019 (11) TMI 109
Rate of GST - Peanut Candy - Gingelly Candy - Uniappam - Neyyappam - Kinnathappam - Kalathappam - Rice Ball (ariyunda) - Achappam - Kuzhalappam - Madakku - Pottlappam - Thatta/Thottavada - Murukku - Avil Vdayichathu - Baked Chips - HELD THAT:- The Peanut candy and Gingelly candy are confectionery products made by heating a variety of sugars and thereby covered under HSN 1702. The Uniappam, Neyyappam, Kinnathappam, Kalathappam, Rice Ball (ariyunda) and Avil Vilayichathu are traditional sweet/snack of Kerala. It is deep fried fitters made with rice and jaggery: Hence these items comes under the category of sweetmeats with HSN 2106 90 covered under Entry 101 of 1st schedule. The Achappam, Kuzhalappam, Madakku, Pottiappam, Thatta/Thattavada and Murukku etc are savouries having a salty or spicy flavour rather than a sweet one. Hence these items comes under the category of namkeens with HSN 2106 90? Therefore if the items are sold under trade / brand name, it will covered under Schedule II of Sl.No.46 and otherwise 101A of the 1st Schedule. The Baked Chips are come under HSN 2008 19 40 other roasted and fried vegetable products.
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Income Tax
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2019 (11) TMI 108
Review petition - Registration u/s 12AA - society has failed to produce any supporting evidence for carrying out any charitable activities for the purpose of public at large - According to the petitioner, the charitable activity claimed to have been carried on is basically holding of a camp for promoting Urologists - HELD THAT:- SLP dismissed.
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2019 (11) TMI 107
Refund being the excess amount paid as tax in view of tax deduction at source done by the Petitioner s customers - processing of the return under Section 143(1) of the Act, the Respondents be directed to refund the amount due to the Petitioner alongwith interest thereon under Section 244(A) - HELD THAT:- Petitioners by various letters date 13 June 2019, 14 June 2019, 10 July 2019, 11 July 2019, 15 July 2019, 17 July 2019 an 8 August 2019 sought an early processing of the return of income u/s 143(1). This particularly in view of the fact that the Petitioner was suffering losses and were facing cash flow difficulty. This problem according to the Petitioner essentially arose on account of the fact that their application u/s 197 of the Act seeking nil deduction of tax in the previous year relevant to the assessment year was not accepted and only partial deduction of tax at source was granted. It is in the aforesaid circumstances that the Petitioner has approached this Court and seeks a directions to the Respondents to expeditiously dispose of their return of income by intimation under Section 143(1). Consequent to the above, grant the refund which will be due on the processing of the return alongwith interest thereon. We note that undue hardship being suffered by the Petitioner only because the Respondents are not discharging their duties under the Act. This as there is no reason forthcoming from the Revenue as to why the delay in processing the refund claim. We direct the Respondent Nos.1 and 2 to process the return of income for the Assessment Year 2018-19 under Section 143(1) of the Act as expeditiously as possible, but definitely within a period of three weeks from today. Further, consequent to the above, pay to the Petitioner the refund, if any due, within a further period of two weeks from the date the return of income is processed.
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2019 (11) TMI 106
Reopening of assessment u/s 147 - eligibility of reasons to believe - benefit of deduction under section 80IB(10) - HELD THAT:- The reasons in support of the impugned notice itself proceed on the above facts viz. - completion certificate was received on 25 September 2012 while the project had to be completed before 31 March 2012 and therefore, this has led to the reason to believe that the income chargeable to tax has escaped assessment. Therefore the basis of the reasons to believe that income chargeable to tax has escaped assessment was that the completion certificate was not obtained on or before 31 March 2012. This was a subject matter of consideration by the Assessing Officer while passing the Assessment Order under section 143(3) of the Act for Assessment Year 2012-13. Thus the reason in support would be a clear case of change of opinion and the reopening notice would be without jurisdiction. Facts which are being relied upon by Mr.Walve are only recorded in the order disposing of the Petitioner s objections and do not form a part of the reasons for the Assessing Officer to come to reason to believe that income chargeable to tax has escaped assessment. The reasons set out in the order of disposing of objections cannot form basis of his reason to believe that income chargeable to tax has escaped assessment at the time he issued the impugned notice. As pointed out above the reasons recorded prior to issue of the impugned notice were on facts which was a subject of consideration in proceedings under section 143(3) of the Act. Thus a clear case of change of opinion and notice without jurisdiction. - Decided in favour of assessee.
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2019 (11) TMI 105
Non-satisfaction on the disallowance claimed u/s 14A - HELD THAT:- Non-satisfaction with the disallowance offered by the assessee has to be arrived at on the basis of the accounts submitted by the assessee. In this case, AO had not carried out the aforesaid exercise but rejected the disallowance claimed by the assessee only on the ground that it was not in accordance with Rule 8D of the Rules. The application of Rule 8D of the Rules would only arise once the Assessing Officer is not satisfied on an objective criteria in the context of its accounts, that suo motu disallowance claimed by the assessee is not proper. In fact, the Supreme Court in the case of Maxopp Investment Ltd. v. Commissioner of Income Tax [ 2018 (3) TMI 805 - SUPREME COURT] while upholding the view of the Delhi High Court has held that the Assessing Officer needs to record his non-satisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise. In the present facts, the Tribunal has correctly come to the conclusion that non-satisfaction as recorded by the AO for rejecting the sou motu disallowances claimed by the assessee is not done as required under section 14A(2) of the Act. On facts, the view taken by the Tribunal is a possible view and calls for no interference. No substantial question of law.
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2019 (11) TMI 104
Under recording of sales - under billing in respect of free sale of sugar - assessing authority on the basis of report of newspaper on various dates found the price of sugar more than the rates shown by assessee and hence, held that the assessee had under recorded the sales by ₹ 20/- per bag and made addition - HELD THAT:- AO had made addition only on the basis of newspaper quotation which was deleted by the CIT(A) and the finding being confirmed by the Tribunal. The same being concurrent finding finding of fact, we decline to interfere in the finding recorded by the authorities below and the appeal is hereby dismissed.
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2019 (11) TMI 103
Eligibility for deduction u/s. 10A - expansion of the existing units - HELD THAT:- The issue raised herein stands concluded in favour of the Respondent- assessee by the order of this Court in its own case [ 2013 (10) TMI 293 - BOMBAY HIGH COURT] . The aforesaid appeal was filed by the Revenue from the order of the Tribunal relating to the assessment year 2002-03. No distinctive features have been shown in the present year from that of assessment year 2002-03 warranting different view to be taken Deduction u/s 80IA(10) - Appeal admitted on question (b) - Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in interpreting the words so arranged used in section 80IA(10) to impose burden on A.O. to prove tax avoidance before invoking section 80IA(10) of the Act when bare reading of the provision does not impose such burden of proving tax avoidance on A.O.?
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2019 (11) TMI 102
Bogus Long Term Capital Loss arising from the transfer of preference shares - Tribunal on facts found that purchase of the preference shares was shown in the balace-sheet as on 31st March, 2001 filed along with return of income for the Assessment Year 2001-02 - HELD THAT:- We note that the impugned order of the Tribunal on finding of fact has come to the conclusion that the transaction for claiming short term loss was genuine. Nothing has been shown to us which would indicate the above finding of fact by the Tribunal is perverse. Therefore, the question as proposed being one of finding of fact, does not give rise to any substantial question of law. - Decided against revenue.
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2019 (11) TMI 100
Reopening of assessment u/s 147 - return of income was processed under section 143(1) by way of intimation. - HELD THAT:- Requirement at the stage of issuing reopening notice is only with a prima facie view that income chargeable to tax has escaped assessment. This is not a final view and is subject to further consideration during the assessment proceedings. In the present facts we find that though paragraph 5 of the reasons recorded in support of the impugned notice for reopening of the assessment is vague in as much as the Assessing Officer is not even certain whether the Petitioner made profits or loss or even the entities/persons dealt with, would make the reasons bad in law. However, the reasons as conclusion that above in para 5 thereof is not the only reason in support of the impugned notice. The other reason in support of the impugned notice is recorded in Para 2 to 4 thereof viz. that income of ₹ 33.59 lakhs chargeable to tax has escaped assessment on the basis of the tangible material and information received from the Deputy Director of Income Tax (Investigation) Kolkata by misuse of National Multi-commodity Exchange platform. This is the very income chargeable to tax which has escaped assessment at ₹ 33.59 lakhs. This is as mentioned in the reasons with regard to the Petitioner purchasing and selling shares through Star Commodities i.e. Broker during the previous year relevant to the Assessment Year by misusing the National Multi-commodity Exchange platform. No reason to entertain this Petition.
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2019 (11) TMI 99
Disallowance of royalty payments for use of logo SHRIRAM owned by said Trust - Allowance as revenue expenditure while computing its income under the head Profits and Gains from Business or Profession - HELD THAT:- Recent decision in the case of ACIT v. M/s Shriram City Union Finance Company Limited [ 2019 (11) TMI 42 - ITAT CHENNAI] is relevant, of which both of us were part of Division Bench who pronounced the said order, wherein tribunal held the aforesaid expenses to be Revenue expenditure. Respectfully following the consistent stand of the tribunal in favour of the tax-payer, we hold that these expenses are to be allowed as Revenue expenses while computing business income of the assessee and therefore, we dismiss the appeal filed by Revenue. The Revenue fails on this issue. Disallowance of expenditure incurred relatable to earning of an exempt income for computing book profits u/s 115JB by invoking provisions of Sec.14A r.w.r.8D - computing liability of the assessee of Minimum alternate tax u/s 115JB - HELD THAT:- The issue is no more res integra as Special Bench of Delhi Tribunal in the case of ACIT v. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. Thus, this issue need to be remitted back to the file of the AO for fresh adjudication and the AO is directed to compute disallowance of expenses relatable to earning of an exempt income to compute book profits u/s.115JB(2) , clause (f) to Explanation 1, in accordance with the ratio of the decision of the Special Bench of the Delhi tribunal in the case of Vireet Investment (P.) Ltd..
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2019 (11) TMI 98
Addition of unexplained credit in the capital account of the partners - HELD THAT:- No specific details of the sundry debtors outstanding at the close of the year 31.3.2013 were filed before the A.O nor any justification was given about the nexus of the cash deposited in the bank account of partnership firm with the available cash in hand with the partners. This issue needs detailed examination by the A.O and therefore the issue raised in Ground No.1 is set aside to the file of A.O for afresh examination which will be in the interest of both the parties. Assessee is also directed to furnish complete details of sundry debtors outstanding in the balance sheet of the partners as on 31.3.2013 and 31.3.2014, sample copies of lorry receipts and also the cash flow statement showing the amount received against the exchange of lorry receipts. Rejection of books of accounts and application of notional percentage 5% on the booking commission - HELD THAT:- Perusal of the paper book shows that no tax audit report has been filed, no such schedules are attached relating to heads appearing in the Profit Loss Account. Even though the assessee was provided sufficient opportunity by the A.O to give necessary details but the same remain unfulfilled at the end of the assessee. Therefore in our considered view Ld. A.O has rightly applied provisions of Section 145 and rejected the book results shown by the assessee. Application of notional profit of percentage of 5% on the booking commission and making addition in our view notional rate should have been applied on the total turnover of the assessee which in this case is ₹ 4,45,24,641/- (Gross receipts from trucks at ₹ 66,34,388/- and gross freight receipt of ₹ 37,89,253/-). Further in our considered view applying of 5% profit rate is much higher and therefore in the interest of justice and fair play we direct the Ld. A.O to apply the net profit rate of 3.5% on the gross turnover of ₹ 4,45,24,641/-. By applying net profit rate of 3.5% the amount on net profit would arrive at ₹ 15,58,362/-. This net profit shall be deemed to have been arrived after claiming all the expenses including depreciation except remuneration allowable to partners. We also direct the Ld. A.O to compute the remuneration allowable to the partners as per the provisions of law and give the deduction of the same against the profit computed at ₹ 15,58,362/-. Ld. A.O is also directed to give the deduction of the net profit of ₹ 2,32,322/- which stands already disclosed by the assessee in the income tax return filed by it. The remaining amount shall the addition sustained in the hands of the assessee. Further our this decision of adjudicating of Ground No.2 shall not be considered as a precedence for the subsequent years. In the result Ground No.2 of the assessee s appeal is partly allowed. Addition u/s 44AE - HELD THAT:- Since we have already applied net profit rate on the total turnover of the assessee including freight receipts from running trucks, making a separate addition u/s 44AE of the Act is uncalled for and therefore same is directed to be deleted. In the result Ground No.3 of the assessee is allowed. Calculation of assessed income - income disclosed by the assessee was not deducted from the addition - HELD THAT:- We find force in the contention of the assessee. While adjudicating Ground No.2 in the preceding paras we have already given direction to give set off of the total income of ₹ 2,32,322/- shown in the Income Tax Return and thus it takes care of assessee s Ground No.4 and therefore the same stands allowed.
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2019 (11) TMI 97
Penalty u/s 271B - not getting account u/s 44AB of the Act since the declared turnover of the assessee was increased by the alleged turnover of cash deposit in the bank account - HELD THAT:- In these given facts where the assessee was in a bona fide belief of treating the commission income as turnover along with other turnover accounted in the books of accounts during the year which was below of limit u/s 44AB of the Act, but Ld. AO treated unaccounted turnover as part of total turnover and holding the assessee liable for paying penalty u/s 271B of the Act for not getting books of account audited, we find that the issue stands spuarely covered in favour of the assessee by the decision of the Coordinate Bench, Jaipur in the case of Shri Satya Prakash Mundra vs. ITO [ 2019 (2) TMI 157 - ITAT JAIPUR ] - Appeal of the assessee stands allowed.
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2019 (11) TMI 96
Reopening of assessment u/s 147 - Deemed dividend u/s 2(22)(e) - AO treated the amount received from the company as deemed dividend - HELD THAT:- There is no illegality in the formation of belief by the Assessing Officer, in as much as, at the stage of issuing the notice u/s 148 of the Act, all that is required is that the AO should have some tangible material evidence to reopen the assessment. The information based on which the notice u/s 148 of the Act was issued is an information received from another Income tax officer and the same cannot be faulted with. It is true that during the course of assessment itself the assessee has explained the nature of transactions. It is also true that in the balance sheet of the company M/s J.C. Infotech Technologies Ltd, it has been clearly mentioned that the amount of ₹ 1,80,42,924/- was given to the assessee which was in the ordinary course of business. When same evidence were furnished before the ld. CIT(A), after examining them, the ld. CIT(A) was convinced that the transaction was in the ordinary course of business and provisions of section 2(22(e) of the Act do not apply. - Decided in favour of assessee.
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2019 (11) TMI 95
Deduction on account of washout charges - cancellation of expired contract - whether there was an extension of contract or not as the said document i.e. fax transmission dated 10.01.2005 was not before the TPO? - TPO came to conclusion that it was not a case of cancellation of contract, but a case of cancellation of expired contract, as the said contract was valid for the month of January, 2005 itself - TPO did not accept the plea of the assessee was that the reason for not shipment of balance amount was not explained by the assessee - HELD THAT:- There was a contract between the parties to purchase the goods in the month of January, 2005. Only part of goods could be purchased by the assessee, as the supplier of the goods had requested for an extension of contract i.e. to extend the period of shipping/delivery. The communication is dated 10.01.2005 and is also prior to shipping of part of the contract received by assessee. The reason for extending the contract was also mentioned in the said letter itself i.e. availability of the vessel at the end of February, 2005. Simultaneously, there was fall in the prices of crude soyabean oil and as a business decision, the assessee communicated to LD Asia, supplier, to cancel the delivery of balance goods. The said decision was taken in order to save the losses that the assessee would have incurred after receipt of the balance crude soyabean oil, as the market had collapsed and the assessee could not have been in a position to sell the goods on profit. Another aspect of issue is that in order to make the aforesaid payment to LD Asia, permission had to be sought from RBI, for such remittance. The permission had been awarded by the RBI, consequent to which only the assessee made the payment to LD Asia. In such a scenario on the ground that the extension of contract, not being available before the TPO, could not be the reason to deny the claim of the assessee, especially where the assessee claims that it had filed the same before TPO. The said communication was filed before the CIT(A), who had accepted that there was fall in prices in the soyabean oil in the market. The only objection was whether there was a valid contract of 2/3rd February, when the contract was cancelled. We find no merit in the orders of the authorities below in this regard as the contract was between the two parties and in case of business exigencies they took a decision to extend the contract and the said contract was then cancelled between the parties because of the market conditions. The payment of the washout charges has been made after sanction of RBI and in such circumstances, we hold that the assessee is entitled to claim deduction of ₹ 1.65 crores. Accordingly we hold so. - Decided in favour of assessee.
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2019 (11) TMI 94
Bogus purchases - Revenue Authority is of the view that assessee could not give any plausible explanation with the support of evidences for this transaction - HELD THAT:- Assessee has not discharged the onus which was casted upon him by making a necessary investigation in the case Kamud Drugs Pvt. Ltd. by the Investigation Wing, Pune. After discussing the evidence, collected by the Investigation wing and the finding of the Ld. AO the Ld. First Appellate Authority has uphold the addition by holding that it is a bogus purchase claim to have been made from Shri Abhijeet Kunduskar (HUF). Ld. First Appellate Authority has also applied the ratio of the case Durga Prasad [ 1971 (8) TMI 17 - SUPREME COURT] as held that surrounding circumstances and human probabilities should not be ignored by the Taxing Authorities. The Ld. First Appellate Authority has also applied the ratio of decision of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] has again given the importance of human probability and considering the surrounding circumstances. Order passed by the Revenue Authority along with the documentary evidence filed by the assessee in the shape of Paper Book and the case law. These are not applicable in the facts and circumstances of the present case. First Appellate Authority has passed a well reasoned order which needs no interference. Therefore, the present appeal filed by the assessee is dismissed.
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2019 (11) TMI 93
Disallowance out of foreign travel expenses - travelling of directors as incurred on the foreign travel to USA made by Ms Unnati Didwania, daughter of managing director of the assessee company - HELD THAT:- The assessee has incurred expenses on travelling of the directors, which included expenses on travel of Ms. Unnnati Didwania to various countries of Europe, Bangkok, Dubai, Singapore, UK and USA etc. AO has disallowed only the expenses related to the USA trip as assessee failed to establish that travel to USA by Ms. Unnati Didwania was wholly and exclusively for the purpose of the business. The assessee failed to file copy of tour report, details of any clients met, details of any seminar/conference or any other documents which could establish that the purpose of the travel was for business. Before the learned CIT(A) also the assessee failed to establish the business purpose of the travel. CIT(A) from the vouchers of foreign exchange purchased by the assessee found that purpose of the travel was private in nature. Onus was on the assessee to establish that the expenditure incurred was for the purpose of the business and in view of the failure on the part of the assessee in discharging its onus, we do not find any error in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the assessee in relation to this issue are dismissed. Disallowance of medical expenses incurred on treatment of one of the Director - HELD THAT:- Resolution passed in the general body meeting of the company, there is no dispute as the reimbursement of medical expenses was allowed to Sh. G.L. Didwaniya as perquisite and not as commercial expediency. The assessee was required to deduct tax at source on the said amount of perquisite, which was part of the salary as defined under section 17 (2) - No error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the assessee, related to the issue in dispute are accordingly dismissed.
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2019 (11) TMI 92
Revision u/s 263 - no proper enquiries were conducted by the Assessing Officer during the course of assessment proceedings - HELD THAT:- Powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should. be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' it is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. As during the course of assessment proceedings, further supported by thorough investigations/enquiries made by the AO during the assessment proceedings, we are of the considered view that there remains nothing for the PCIT to assume jurisdiction u/s 263 of the Act to say that the assessment order is not only erroneous but prejudicial to the interest of the revenue. We are of the considered view that the PCIT has wrongly assumed jurisdiction u/s 263 of the Act, hence his combined order for all the A.Ys deserves to be set aside. - Decided in favour of assessee.
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2019 (11) TMI 91
TP Adjustment - Whether international transactions undertaken by the appellant do not satisfy the arm s length principle envisaged under the Income-tax Act 1961 Act? - TPO applied minimum threshhold limit of 25% export earning from Software Development Services wherein companies whose export revenues from Software Development Services are less than 25% of the operating revenues were excluded - HELD THAT:- Appellant is mainly an export oriented software development provider thus companies functionally dissimilar with that of assessee need to be deselected from final list. Act does not provide directions as to what percentage RPT transaction have material effect on the overall margins. In the definition of the Associated Enterprises in section 92A(2)(a), it is provided that one enterprise holding 26% shares in other enterprise can be considered as an AE. Similarly, u/s 40A(2b) of the Act, it is provided that persons having substantial interest is a person carrying not less than 20% of voting power in that company. Keeping these provisions in mind, we are of the view that the filter of 25% applied by the TPO is apt.
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2019 (11) TMI 90
Addition u/s 69A - unexplained asset of the assessee - whether the lower authorities were justified in treating the gold jewellery weighing 4759.46 gms valued as unexplained asset of the assessee u/s 69A - HELD THAT:- Once the assessee had filed affidavits from the customers, the onus on proving the transactions with the parties was discharged and the burden shifted on the AO to disprove the transaction by bringing on record some tangible material to show that the averments made in the affidavit or the explanation offered by the assessee was false or factually incorrect. We however find that having received these affidavits, no manner of any further enquiry was carried out by the AO. We find that in other cases where the assessee had claimed the jewelleries belonged to jewelers or karigars, the AO had issued notices u/s 131 - in the case of jewelleries belonging to the customers, no enquiry from the customers were carried out by the AO by issuing notices u/s 131 of the Act, even though in the sworn affidavits complete address of the customers were available. Having regard to the foregoing facts and also having regard to the trade and custom practiced in the jewellery business and also having regard to the volume of assessee s business, we are of the opinion that the assessee s explanation with regard to jewelleries weighing 1406.27 gms belonging to seven customers should have been accepted by the AO. As regards jewelleries weighing 842.340 gms, we find no further evidences were submitted by the assessee either before the lower authorities or before us to substantiate his explanation. We therefore direct the AO to delete the addition made with reference jewellery weighing 1406.27 gms and uphold the addition of jewellery weighing 842.340 gms. We uphold the addition to the extent of 2343.34 gms (4759.460 548.300 461.550 1406.270) out of 4759.460 gms equivalent to ₹ 65,93,763/- and accordingly assessee gets relief of ₹ 67,98,553/-. Ground No. 1 is therefore partly allowed. Income from unrecorded purchase sale transactions - estimation of benefit of telescoping should be allowed against the addition made on account of unexplained investment u/s 69A - HELD THAT:- Since the assessee s transactions of purchase sale preceded the date of search when unexplained jewelleries were found, the necessary inference which one should draw is that the income which the assessee had earned from his undisclosed trading transactions in gold and jewelleries was re-invested in purchase of jewelleries which were found from his possession at the time of search. Accordingly we hold that the profit of ₹ 25,86,426/- determined with reference to the notings found in the seized documents should be telescoped against the addition of ₹ 65,93,763/- as confirmed in Para 8 above and accordingly no separate addition of ₹ 25,86,426/- shall be made. Ground No. 2 of the assessee and Ground Nos. 1 to 5 of the Revenue are therefore partly allowed.
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2019 (11) TMI 89
TDS u/s 194H - disallowance of salary expenditure by treating it as commission paid for selling goods - submission of the assessee rejected simply for the reason that the assessee had not maintained the salary register and appointment letters / agreements - HELD THAT:- It is pertinent to mention that in small business houses such record are not normally maintained and they are not mandatory. The assessee has also produced the vouchers with respect to the payment made to his employees but, they were also rejected by the Ld. Revenue Authorities without valid reasons. Revenue Authorities have also not brought out anything on record from the details produced by the assessee to establish that the payments made to the individuals exceeded taxable limits. Addition made on the basis of presumption is not justifiable. When the assessee had furnished the details of the payment to his employees it cannot be simply rejected without verifying the facts. Therefore, we hereby direct the AO to delete the addition made invoking the provisions of section 194H and 40(a)(ia) . TDS u/s 194J - addition u/s 40 - Disallowance of accounting charges - HELD THAT:- It is pertinent to mention that in small business houses such record are not normally maintained and they are not mandatory. The assessee has also produced the vouchers with respect to the payment made to his employee but, they were also rejected by the Ld. Revenue Authorities without valid reasons. Revenue Authorities have also not brought out anything on record from the details produced by the assessee to establish that the payments made to the individual exceeded taxable limits. Addition made on the basis of presumption is not justifiable. When the assessee had furnished the details of the payment to the Accountant towards accounting charges it cannot be simply rejected without verifying the facts. Direct the AO to delete the addition made invoking the provisions of section 194J and 40(a)(ia) of the Act. - Decided in favour of assessee.
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2019 (11) TMI 88
Deduction u/s. 10A - absence of any response from the assessee repeated the original assessment order wherein the interest earned on FD was treated as income from other sources and thereby the benefit of exemption u/s.10A and the benefit of netting was not allowed - CIT(A) upheld the action of the AO HELD THAT:- The reasons of which have already been reproduced in the preceding paragraph. From the various details furnished by the assessee in the paper book we find the order for A.Y.2002-03, 2004-05 and 2005-06 were set aside to the file of the AO by the Tribunal. We further find the AO himself has allowed the benefit of netting off of interest and allowed the deduction u/s. 10A for A.Y.2009-10 and 2010-11. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate that the FD s are inextricably linked with the business of the assessee. AO shall decide the issue afresh and as per law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the AO and not disregard the statutory notices failing which the AO is at liberty to pass appropriate order as per law. - Decided in favour of assessee for statistical purpose.
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2019 (11) TMI 87
Expenditure on account of forfeiture of shares - allowable business expenditure - HELD THAT:- Transaction would attract the provision of section 2(47) of the Act and the extinguishment of any right therein is a capital loss and cannot be held as a business loss. No merit in the action of the Revenue authorities especially in view of the direction of the Tribunal in the original proceedings while setting aside the issue to the file of the AO. There is no finding by the AO to the direction by the Tribunal that the lower authorities have not adverted to the crucial fact i.e., assessee s investment in Surya Roshni Ltd., a group company by way of subscription to the convertible debentures being held as stock-in-trade not only in this year, but, in earlier year also. Once the shares are held as stock-in-trade as argued before the Tribunal on the earlier occasion for which the Tribunal had restored the issue to the file of the AO for verification of this crucial fact and since there is no material to controvert the above submission of the assessee before the Tribunal that such shares were held as stock-in-trade, therefore, we are of the considered opinion that the lower authorities in the set aside proceedings have not followed the direction of the Tribunal. We find the CBDT, vide Circular No.6/2016 dated 29th February, 2016 had categorically held that where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income. In our opinion, the above Circular being clarificatory in nature is retrospective and cannot be held as prospective as argued by the ld. DR. We further find the coordinate Bench of the Tribunal in the case of Cosmos Industries Ltd. [ 2019 (1) TMI 268 - ITAT DELHI] while deciding somewhat identical issue has held that the loss incurred on sale of shares of a subsidiary company is a business loss. - Decided in favour of assessee.
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2019 (11) TMI 86
Non-granting of interest to the assessee for the period starting from the date of determination of the refund to date of issue of refund - claim of interest on amounts which were not allowed by the Assessing Officer while issuing the refund to the assessee - HELD THAT:- As relying on M/S. K. LAKSHMANYA AND COMPANY [ 2017 (11) TMI 589 - SUPREME COURT] and M/S. HEG. LIMITED [ 2009 (12) TMI 35 - SUPREME COURT] we hold that even on account of interest withheld by the Assessing Officer and not issued on time, for part of the refund, the delay is from June 2006 to July 2015 and for the next refund of ₹ 2.01 crores, the delay is from 15.06.2010 to 20.07.2015, the assessee is entitled to the interest. Accordingly, we hold that the assessee is entitled to claim the interest for withholding the refund due to the assessee on account of interest ultimately allowed to the assessee for a period from the date of short allowed to the date of refund on 20.07.2015. Accordingly, we direct the Assessing Officer to compute the interest in this regard after verifying the calculation of the assessee for the aforesaid interest due to the assessee. Thus, grounds raised by the assessee in this appeal are allowed. Claim of loss on diminution in value of fertilizer bonds - assessee pointed out that the claim made by the assessee was withdrawn by an order passed u/s 154 HELD THAT:- The bonds which were held under the head current investments assets, within the diminution value of the bonds was in the nature of revenue loss and could be claimed by the assessee . Since the bonds was held in stock in trade, the same could be valued at market value or cost, whichever was less. Following the said decision of the Hon ble High Court in assessee s own case [ 2015 (12) TMI 1769 - DELHI HIGH COURT] we hold that the assessee is entitled to claim the loss for the diminution in value of fertilizer bonds, since the bonds were held in stock in trade and the same had to be valued either on market rate or cost, whichever was less. Thus, grounds of appeal raised by the assessee in this appeal are allowed.
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2019 (11) TMI 85
Capital gains computation u/s 48 - deduction of interest as part of cost of acquisition from full value of sale consideration - AO asked the assessee why interest expense as claimed in cost of improvement/acquisition of the transacted property should not be disallowed, as interest expenditure should be claimed u/s. 24 against house property income - HELD THAT:- Without making the payment of the amounts to the builder the assessee could not have obtained the conveyance deed - AO is wrong in taking the cost of acquisition only as stated in the conveyance deed. As against that the assessee has filed evidence on record to contend that what is shown by him as cost of acquisition are the payments made to the builder for getting the right over the property which is sold by him. Such claim of the assessee could not be denied unless proved otherwise. There is no material on record to suggest that the payments which are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year under consideration. It is so with respect to base price, processing fee, preference charges, external development charges, tire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assess e is entitled to get deduction thereof under the provisions of s. 48(ii) Deduction under section 24(b) and computation of capital gains under section 48 are altogether covered by different heads of income i.e., income from 'house property' and 'capital gains' - deduction u/s 24(b) is claimed when concerned assessee declares income from 'house property', whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48. We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 - See Praveen Gupta vs. Assistant Commissioner of Income Tax [ 2010 (8) TMI 820 - ITAT DELHI] and ACIT vs. C. Ramabrahmam [ 2012 (11) TMI 430 - ITAT CHENNAI] - Decided in favour of assessee
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2019 (11) TMI 84
Long-term capital gain on jewellery - short of the jewellery found during the search - HELD THAT:- Assessee has given the explanation that the short of the jewellery found during the search was due to the reason that in a recent time the assessee s daughter got married and some of the jewellery is either with the relatives or with the valuer. These facts were brought on record during the search and in the statement of the assessee taken during the search has given details of the relatives of assessee with whom she has kept the jewellery. It is the fact that the assessee has not filed any confirmation of these relatives but it is also pertinent to note that the Revenue has not issued 133(6) notice for obtaining the real picture of assessee s submissions. There is no mechanism under the provisions of Income Tax Act, if there is short of the jewellery declared by the assessee then the same should be treated as sold and the capital gain is attracted. In the present case the Assessing Officer as merely suspected that the jewellery was sold, but has not brought any material on record - AO as well as CIT(A) overlooked the practical aspect that the jewellery is with relatives / valuer. Hence, Ground No. 1 of the assessee s appeal is allowed. Addition u/s 69A on account of alleged unexplained investment in jewellery - HELD THAT:- It is pertinent to note that the diamond jewellery is always studded with gold and it is not a case of revenue that separate diamonds were found during the search operation. Merely because the jewellery is studded with the diamond of 47.18 carat in the instant case, the same cannot be added in the hands of the assessee when such jewellery formed part of the gross weight of the jewellery found from the premises of the assessee. The assessee made full disclosure and has submitted the details of the jewellery which were accepted by both the authorities and was never questioned. Thus, this addition does not sustained. Hence, Ground No. 2 of the assessee is allowed.
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2019 (11) TMI 83
Exemption u/s 11 - Withdrawing registration granted earlier u/s 12A - proof of charitable activity u/s 2(15) - assessee foundation has not been operating as a charitable institution as the trust has allowed the property/hospital of the society to be taken over by Max group by creating various financial and legal obligations and has virtually handed over the activity of the hospital to Max group which are corporate bodies established with a clear intention of profit motive which, according to him, is against the basic principles of charitable organizations - the assessee trust did not fulfill the minimum notified criteria of providing 25% of OPD and 10% of beds in IPD as free treatment to the economically weaker section - Whether activities of the assessee society fall within the meaning of charitable purpose u/s 2(15) read with section 11? - HELD THAT:- There is nothing on record to suggest that the hospital is operated by the said companies or by the Board of Management/Directors or shareholders of those companies. From the various details furnished by the assessee in the paper book, it is noticed that the hospital activities were always under the control and supervision of its management/Board of Trustees. A perusal of the analysis of the percentage of payment made by the assessee to Max group of companies vis- vis the total expenditure incurred by the assessee in various years shows that the same was maximum of 25% in the financial year 2005-06 which has gradually reduced to 20% in financial year 2013-14. The above details furnished by the assessee in the paper book suggest the independence of the assessee vis- -vis Max entities with gradual decline in the obtaining of services from them over a period of time. This also substantiates that the assessee society was incurring substantial expenses on its own account other than the payments made to Max entities. We find force in the argument of the ld. counsel for the assessee that the assessee, due to lack of own funds and expertise in the field of construction of hospital and rendering medical services being a highly specialized and technical field, has entered into the agreements with Max group of companies who were already engaged in the said field which not only helped the assessee in building the state of the art facility, but, also to attract talent in terms of specialized doctors and other paramedical staff. Under these circumstances, we are of the considered opinion that it is difficult to agree with the allegation of the DIT(E) that there is diversion of the control of the property of the assessee i.e., the hospital in favour of Max group of companies. Various details furnished by the assessee such as minutes of the meeting of the governing body of the assessee society substantiating that various financial and operational decisions were taken by the said body without involvement of Max entities. The copy of various approvals applied and allotted were in the name of the assessee society without any indication of Max entities. We find the organizational structure of the assessee society/hospital shows that the assessee had independent management and heads of various departments looking after its various operations which were independent from Max entities and no involvement of Max entities have been brought on record. None of the members of the governing body/trustees of the assessee and the directors/board of management of Max are persons specified u/s 13(3) of the IT Act - we are of the considered opinion that the trust has not handed over the management of the hospital to the Max group of concerns. Since there is no allegation by the Revenue that the activities of the trust/society are not genuine or are not being carried out in accordance with the objects of the trust and since the ld. counsel for the assessee before us has demonstrated clearly that the management and control of the hospital was always with the assessee society and the assessee society has not virtually handed over the management of the hospital to the Max group of concerns which are corporate bodies established with the clear intention of profit motive and since the Revenue also failed to bring on record any material to suggest that the assessee trust has refused any patient from the economically weaker section of the society in violation of the guidelines laid down by the Hon'ble Delhi High Court, we find no justification on the part of the Ld.DIT(E) for withdrawing the registration granted u/s 12AA of the Act with retrospective effect. - Decided in favour of assessee
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2019 (11) TMI 82
Disallowance u/s.14A of Rule 8D - HELD THAT:- In case there is no exempt income, then no expenses could be considered for disallowance. In the present case, the ld.CIT(A) has held that the assessee has no exempt income in this year. In view of the above situation, we find that no merit in the first ground of appeal raised by the Revenue Addition u/s 14A while computing the book profit u/s. 115JB - HELD THAT:- In VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] in the same set of facts the computation under clause (f) of explanation 1 to section 115JB as has been done by the authorities below u/s 14A r.w.r. 8D of the Income Tax Act, 1962 is not permissible and hence the Ld. CIT(A) deleted such disallowance without any ambiguity so as to warrant interference. Hence, this ground of appeal preferred by the Revenue is devoid of any merit and thus dismissed. This ground of appeal preferred by the assessee is thus allowed. Disallowance of Forex loss - HELD THAT:- As decided in ADANI LOGISTICS LTD. VERSUS DCIT, CIRCLE-1 (1) (1) , AHMEDABAD AND VICE-VERSA [ 2019 (3) TMI 1662 - ITAT AHMEDABAD] If we examine the order of the ld.CIT(A), then it would reveal that the ld.CIT(A) has examined the facts in right prospective while deleting the disallowance. The AO was of the view that such loss arose out of foreign currency loan acquired in respect of fixed assets. He failed to appreciate real transaction, and how the loss has been worked out by the assessee. In earlier year, the Tribunal has upheld deletion, and therefore, we do not see any reason to interfere in the order of the ld.CIT(A) - no reason to interfere with the order passed by the Ld. CIT(A) in favour of the assessee on the identical issue and hence, the same is hereby confirmed. Employees contribution to Provident Fund and ESIC Act not allowable u/s 36(1)(va) - HELD THAT:- It has already been decided by the jurisdictional High Court in the matter of CIT vs. Gujarat State Road Transport Corporation that employees Provident Fund and ESIC welfare fund contribution is only allowable as a deduction Under Section 36 (1)(va) in the event if it is paid by the due date prescribed in the concerned Act. In that view of the matter the authorities below has disallowed such contribution made by the assessee. Argument has been advanced by the Ld. Counsel appearing for the assessee that since the issue is pending adjudication before the Hon ble Supreme Court this matter may be remitted to the Ld. AO for adjudication of the same afresh after the issue is decided by the Hon ble Apex Court and, therefore, the order passed by the Co ordinate Bench has been relied upon. However, We find no such justification in passing such an order since the matter at the present moment is covered against the assessee
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2019 (11) TMI 81
Reopening of assessment u/s 147 - whether the AO could take the aid of Explanation 3 to Section 147 to make some other addition on the aspect in respect of which there is no whisper in the entire proceedings u/s 147, after the conclusion of such proceedings u/s 147 ? - Section 154 being invoked with respect to the original assessment, finalized under section 143(3) - HELD THAT:- We find it difficult to accept the argument of the learned DR that even after conclusion of the proceedings u/s 147 AO can take the aid of Explanation 3 to Section 147 of the Act to make any addition. The difficulty here is that it is not under Explanation 3 to Section 147, AO dealt with the issue of closing stock, but the AO dealt with this issue u/s 154 of the Act. In any case, it is not the case of the Ld. AO that Section 154 is being invoked with respect to the original assessment, finalized under section 143(3) of the Act. If we accept the argument of the learned DR that u/s 154 AO is empowered to deal with the escapement of income in respect of which the reasons were not recorded even after the assessment reopened under section 147 of the Act is completed, it would empower the AO to go on making one addition after the other by taking shelter of Explanation 3 to Section 147 endlessly. Such a course is not permissible. Power that is available to the AO under Explanation 3 to Section 147 of the Act, in our considered opinion, is not available to him u/s 154 of the Act, which obviously came to be exercised by the AO after the conclusion of the proceedings u/s 147 of the Act. Which shall result in quashing of the impugned order passed under section 154 of the Act, we deem it not necessary to delve deeper in to the merits of the case, and suffice it to say that the rectification proceedings assumed by the AO resulting in the second addition are beyond the jurisdiction of the learned AO and cannot be sustained. With this view of the matter, we accept the contentions of the assessee and direct the learned AO to delete the addition. - Appeal of the assessee is allowed.
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2019 (11) TMI 80
TDS u/s 194H - Disallowance of bank guarantee charges for non deduction of TDS - principal - agent relationship - HELD THAT:- It is sine qua non that there has to be a principal - agent relationship for a payment to be treated as commission or brokerage. The recipient of the income must act on behalf of the principal. Here the banker does not act on behalf of the assessee for rendering any kind of service. The contract of guarantee does not give any rise to principal - agent relationship between the assessee and the bank and, therefore, the consideration received by the bank on account of guarantee commission cannot be reckoned as commission as contemplated under section 194H and accordingly, there was no requirement to deduct TDS on this payment. See CIT vs. JDS Apparels (P.) Ltd. [2014 (11) TMI 732 - DELHI HIGH COURT] , Kotak Securities Ltd. vs DCIT ( 2012 (2) TMI 77 - ITAT MUMBAI ) , DCIT vs PRL Projects Infrastructure Ltd. ( 2017 (9) TMI 241 - ITAT DELHI ) , ACIT vs. Jaypee Infratech Ltd. (Supra) and DCIT vs. Lakshya Media (P.) ( 2016 (8) TMI 867 - ITAT MUMBAI ) - Decided in favour of assessee.
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2019 (11) TMI 79
Levying of penalty u/s. 271AAB - voluntary disclosure of Income by assessee - HELD THAT:- AO has not specified any document assets and entry during the course of search which indicate that assessee s additional undisclosed income, represents any money, bullion, jewellery or valuable article or any entry in the books or other documents therein. The assessee has made disclosure of ₹ 10.51 crore on account of the fact that certain income out of the real estate development and land related activities pertaining to F.Y. 2012-13 and F.Y. 2013-14 which were not recorded in the books of account as per statement u/s. 132(4) dated 30.08.2013 - there was no pin pointed question posed by the search team in regard to incriminating material/documents related to such undisclosed income. CIT(A) has confirmed the penalty u/s. 271AAB on the assumption bases by stating that admitted undisclosed income may be directly related to entries in loose papers and transactions not recorded in the books of accounts found subsequently during the course of search on 28.10.2013. Lower authorities have failed to establish that assessee has disclosed the income with reference to any specific loose papers/asset etc. AO has failed to substantiate that the disclosure made by the assessee u/s. 132(4) was on the basis of incriminating material. In the case of ACIT Sri Kanwar Sain Gupta [ 2018 (6) TMI 1559 - ITAT KOLKATA ] has held that the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. - Decided in favour of assessee.
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2019 (11) TMI 78
Exemption u/s 54F - purchase of residential land - Nursing Home was constructed in addition to the residential house - benefit of indexation in computing capital gains - HELD THAT:- Admittedly, assessee constructed commercial property being nursing home, on the land purchased from sale proceeds, and residential house, which has been claimed as exemption u/s 54F. Section 54F is very clear in respect of exemption being available to assessee, in respect of either purchase of residential property or construction of residential property within the period of limitation prescribed therein. Do not find any force in argument advanced by Ld.AR regarding granting of exemption u/s 54F in respect of entire land on which construction in respect of residential house as well as commercial building being nursing home have been done. It is observed that Ld.AO while computing capital gain, allowed ₹ 33,41,839/- as cost of land appurtenant to residential house for which there is no basis.CIT(A) mentions land on which residential house constructed amounts to ₹ 586.96 sq.mts, out of total land 2543.25sq.mts. Both AO and CIT(A) failed to compute vacant land that may be annexed to residential house. We therefore, direct Ld.AO to consider all these aspects for purpose of computing exemption u/s 54F and capital gains payable by assessee. Needless to say that assessee is eligible for benefit of indexation in computing capital gains. - Grounds raised by assessee stands allowed for statistical purposes.
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2019 (11) TMI 77
Revision u/s 263 - sale of the land treated as business income or capital gains - AO has not assessed the said income from sale consideration of undivided interest in the land under the head Business as is of the view of the ld.PCIT - HELD THAT:- This property is held by the assessee for more than seven years. It is an admitted fact that the assessee had proposed to start a Software Technology Park, and on it is failure to do so, the assessee had sold the said undivided interest in its land to various flat owners. The business of the assessee is not of purchase and sale of the land. The assessee has in its return claimed the same as giving rise to long term capital gains, which has also been examined by the Assessing Officer in the course of original assessment. The same has also been examined by the Assessing Officer in the course of Wealth Tax Assessment. What is the error in the finding of the Assessing Officer has not been pointed out by the ld. PCIT in his impugned order passed u/s.263 of the Act. Just because, the Assessing Officer has not assessed the said income from sale consideration of undivided interest in the land under the head Business as is of the view of the ld.PCIT, cannot term the assessment order passed by the Assessing Officer to be one done by non-application of mind, or one done without making due verification, or one done without making necessary enquiries. Just because by shifting the head of income, the assessee would be hit by tax liability cannot be ground enough for shifting the capital gains disclosed by the assessee to the business head, especially when the property has been shown as an investment by the assessee and the same has also been clearly demarcated and the assessee has also not done any business activity of construction in respect of the said property. In this circumstance, we are of the view that the order of PCIT passed u/s.263 of the Act is unsustainable - Decided in favour of assessee.
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2019 (11) TMI 76
Reference to the valuation officer under sub-section 142A - HELD THAT:- We find that the relevant A.Y before us is A.Y 2013-14 and the return of income was filed on 30.09.2013. Therefore, 21 months from such date would expire on 31.3.2016. Thus, the assessment order u/s 143(3) was required to be passed by 31.03.2016 but since the AO has made a reference to the valuation officer u/s 142A of the Act, vide letter dated 19.02.2016, and the valuation report was filed on 20.7.2017, the said period will have to be excluded for determining the time limit. Is the period allowed to the DVO to submit the report. u/s 142A of the Act, the valuation report has to be submitted within six months from the date of the receipt of the reference. Admittedly, in the case before us, the valuation officer has submitted the report beyond a period of 15 months. Whether this period can be enlarged or condoned is to be seen. As rightly pointed by the learned Counsel for the assessee, the word used in sub-section 6 of section 142A is shall and in other sub sections, the word used is may . The Hon'ble Delhi High Court in the case of B.K. Khanna Co. vs Union Of India And Others on [ 1984 (9) TMI 31 - DELHI HIGH COURT] has clearly held that where the words may and shall are used in various provisions of same sections, then both of them contain different meaning and the word shall shall mean mandatory . As argued assessee, the AO was required to call for a report from the valuation officer within six months from the date of the reference and the valuation officer was bound to give such a report with such prescribed period. As seen from the assessment order, the AO had directed the valuation officer to give the valuation of the property as on 8.2.2010, whereas the valuation officer has given the report as on the date of the execution of the sale deed. DVO has clearly not followed the directions of the AO and also not followed the timeline fixed under the Act. When it is mandatory for an officer to follow the timeline prescribed under the Act, such delay cannot be condoned. Therefore, we agree with the contentions the assessee that the report of the Valuation Officer has to be filed within the time given u/s 142A(vi) and therefore, the assessment order passed on the basis of such report of Valuation Officer beyond the time limit is not sustainable. Therefore, we allow the assessee s appeal and the assessment order is set aside. Assessee s appeal is allowed.
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2019 (11) TMI 75
Capital gain computation - distress sale - reference to DVO - fair market value u/s. 50C - Why property could not have been sold at the fair market value? - HELD THAT:- On perusal of the DVO report, it is noticed that the property which has been sold by the assessee was land locked and had no approach road. It is only Smt. Sukanya Kamalakar Reddy s property which had the approach to the road and since the injunction was denied to the assessee and particularly since it has been decreed that the vendors of the assessee did not have any legal title over the property, we are of the view that the assessee was constrained to sell the property to Smt. Sukanya Kamalakar Reddy only. Therefore, it is clearly a distress sale. Though the assessee has raised the objections before the Assessing Officer as well as the DVO, neither the A.O. nor the DVO have passed any speaking order as to why these objections are not acceptable to them. CIT(A) has also erred in holding that the ITAT has already considered these facts in the earlier proceedings. We have gone through the order of the ITAT and find that the Tribunal had only remanded the issued to the file of the A.O. for re-consideration of the issue on merits after calling for the DVO report, if necessary. Therefore, the ITAT has not decided the issue on merits and all these facts were never considered by any of the Authorities below. From the computation of total income filed along with return of income for the A.Y. 2006-07, we find that the assessee had offered the short term capital gains to tax by considering ₹ 6 lakhs as sale consideration received after deducting therefrom, the cost of acquisition. The documents relating to the Civil Suit are also filed before us and we find that there was a legal dispute and the assessee has been held to be not a legal title holder of the property. In view of the same, we accept the contention of the assessee that it is a distress sale and assessee was constrained to sell the property to none other than the Respondent in the Civil Suit and therefore, the property could not have been sold at the fair market value. Appeal of the assessee is allowed.
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2019 (11) TMI 74
Exemption u/s 54F - purchase of property in the name of common pool of family - partition of HUF into smaller HUF - HELD THAT:- Property was purchased in the year 1964 in the name of the assessee and his father was no longer alive at that time. From the partition deed, it is seen that various properties were purchased in the names of various persons of the HUF. All those properties have been put into common hotchpotch, and likewise, the property purchased in the name of the assessee also has been put into the common pool of properties and it has been partitioned in favour of the bigger as well as the smaller HUFs. The partition deed was also stamped in the year 1995 which is prior to the survey in 2011. Therefore, it cannot be considered to be an after-thought. The factum of the partition deed was also brought to the notice of ULC authorities and also to the income tax authorities 269UA proceedings, by one of the coparceners Sri Sanjeeva Rao Bongu. Thus, the factum of partition has been brought to the notice of the Department as well in 1997 itself. Therefore, in view of these documents, which have been considered by the CIT(A) for granting relief, we see no reason to interfere with the same particularly when the protective assessments in the hands of individual co-parceners have become final.. Accordingly, grounds raised by the Revenue are dismissed.
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2019 (11) TMI 63
Voluntary Disclosure of Income Scheme VDIS - identification of jewellery declared - whether sale of jewellery/goods were out of the declaration made under the Voluntary Disclosure of Income Scheme VDIS? - HELD THAT:- The mere change in the nomenclature from jewellery to bullion in the VDIS declaration visa-vis sale bills would not be relevant and is of no consequence. The only exercise the Assessing Officer had to undertake was whether the gold, silver and diamond declared under the VDIS and subsequently, claimed to have been sold after converting the same into bullion are one and the same. However, on the premise that there is change in the nomenclature the Assessing Officer as well as the Appellate Authorities have disbelieved the claim of the appellants. AO has merely stated there was a change in nomenclature and as such it could not be accepted that the items declared under the VDIS was the same as sold by the appellants. In fact, tribunal fell in error by presuming that Assessing Officer had disputed the quantitative details, which was not the factual scenario, since the Assessing Officer had verified the details of the quantities returned and sold, which has not been disputed and obviously for the reason sale having been correlated on the assaying of the jewellery. In fact, it has been brought to the notice of the tribunal that jewellery declared was of lower purity and as such on conversion i.e., upon assaying purity had reduced proportionately, which has been erroneously ignored by the tribunal. Tribunal erred in not considering the fact that under similar circumstances in the following cases rendered in respect of the assessees who were similarly placed, had been accepted and the appeals filed by the respective assessees had been allowed. Tribunal committed a serious error in arriving at a conclusion that items sold by the respective appellants were different from the jewellery declared under the VDIS and as such the substantial questions of law deserves to be answered in favour of the assessees and against the Revenue.
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2019 (11) TMI 62
Addition of purchase expenses u/s.40A(3) - payments for purchases are made in cash - Contention of the assessee that provisions of Section 40A(3) of the Act have no application in as much as, the credit balance of the parties were transferred to the partners account and partners in turn settled the claims of the parties in cash - HELD THAT:- Since assessee firm has not paid cash, the provisions of Section 40A(3) of the Act have no application. We are afraid this submission of the assessee cannot be accepted for the reasons that undisputedly, the payees had received money in cash and thereby defeating the very purpose of enacting the provisions of Section 40A(3). As in the case of Attar Singh Gurmukh Singh vs. ITO [ 1991 (8) TMI 5 - SUPREME COURT ] wherein it was decided that when there is direct payment to the payees in cash, the provisions of Section 40A(3) of the Act are attracted. what is not directly permitted cannot be indirectly permitted. Therefore, we do not find any reason to interfere with the orders of the lower authorities. Thus, ground of appeal No.2 filed by the assessee stands dismissed. Disallowance of commission paid to Balakrishnan Minor (HUF) u/s.40A(2) (b) - there was no proof of rendering any services by the Balakrishnan Minor (HUF) and secondly the services stated to have been rendered only in individual capacity - HELD THAT:- It is settled position of law that commission payment cannot be allowed as deduction in the absences of any evidence on record establishing rendition of services. Even before us, no material is shown establishing rendition of actual services by Balakrishnan Minor (HUF) and therefore commission payment cannot be allowed as deduction. Ground No.3 filed by the assessee is also stands dismissed.
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2019 (11) TMI 42
Disallowance in respect of Royalty Payments - capital expenditure - HELD THAT:- What was paid by the assessee is for the right to use the Logo belonging to Shriram Ownership Trust. When the assessee made payment for use of right, this Tribunal is of the considered opinion that the same cannot be treated as capital expenditure. CIT(Appeals) has rightly found that the payment made by the assessee is in the revenue field. In fact, similar addition made by the AO for the assessment year 2002-03 was deleted by this Tribunal. CIT(Appeals) by placing reliance on the order of this Tribunal in Shriram Tamil Nadu Pvt. Ltd., [ 2016 (8) TMI 1204 - ITAT CHENNAI] allowed the claim of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
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Customs
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2019 (11) TMI 73
Maintainability of appeal - existence of efficacious alternative remedy - appropriate forum - Section 128 of the Customs Act, 1962 - HELD THAT:- Much has been argued out by the counsel for petitioners on merits, as well as on the applicability of the exemption notification and attention is also drawn to the fact that since last seven years they are importing goods and are classified as stated in the memo of this writ petition. We are not inclined to adjudicate on the merits of the matter as impugned order is an appealable order and a statutory appeal is provided under Section 128 of the Customs Act, 1962 before the appellate forum. Petition dismissed on the ground of availability of efficacious alternative remedy.
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2019 (11) TMI 72
Imposition of penalties u/s 112 (b) and 114AA of the Customs Act, 1962 on the Director of the Respondent - CHA s direct involvement with the importer or not - HELD THAT:- Pertinently, it was noted that the Central Bureau of India (CBI) had investigated the issuance of bogus exemptions certificates and had not charge-sheeted the CHA. The charge-sheet was filed only against the proprietor of the importer and its authorized signatory and the proprietorship concern. The CBI in its charge-sheet recorded that the CHA had retained photocopies of the bills of exchange for its office records and had forwarded the original copies of the same along with his bill to the importer for getting payments. Thus, CHA s direct involvement with the importer was not established. This fact prevailed upon this Court in dismissing the appeal filed by the Customs Department, not finding it to be fit to impose harsher penalty. The Customs Department is aggrieved by the deletion of the penalties imposed on the CHA. In respect of the show case notice dated 06.03.2013, penalty has been imposed under Section 112 (b) as well as 114AA of the Act. A perusal of the said provisions clearly reveals that the penalty under the said provisions can be imposed wherever there is an element of mens rea or conscious knowledge, which is a sine qua non for imposition of the penalty - The facts of the case in hand do not reveal any such element of mens rea or conscious knowledge qua the importer. There is no active role attributed to the Respondent, which justifies the imposition of the penalty under Section 112 (b) and Section 114AA of the Act. Nothing has emerged even in the criminal investigation. Imposition of penalties u/s 112 (a) of Customs Act - HELD THAT:- For imposition of penalty in respect of the cases falling under Section 112 (a) of the Act, mens rea may not be required to be proved as condition precedent, however, when it comes to imposition of the penalty on an abettor, it is necessary to show that the said essential element/ ingredient is present - In the present case, there is no element of mens rea or conscious knowledge which can be attributed to the CHA. The investigation carried out by the CBI and other facts reveal that the CHA acted bona fide and merely facilitated the imports on the strength of the documents which were handed over to him by the importer -There is no sufficient material on record to show that the CHA was actively involved in the fraudulent availment of the exemption by the importer, warranting levy of personal penalty. Appeal dismissed.
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2019 (11) TMI 71
Challenge to self assessment before the Commissioner appeals - scope of section 128 of the Customs Act, 1962 - HELD THAT:- Issue is now settled by the decision of the Apex Court in case of ITC Limited [ 2019 (9) TMI 802 - SUPREME COURT ] where it was held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund. The issue is squarely covered by the said decision of Apex Court. Since Commissioner (Appeals) has not decided the issue on merit and had disposed of the appeal stating that appeal do not lie against self assessment made, the matter needs to be remanded back for consideration of issues on merit - Appeal allowed by way of remand.
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2019 (11) TMI 70
Smuggling - Indian Currency - absolute confiscation - imposition of penalties u/s 114 of CA - HELD THAT:- The undisputed facts are that the Appellant Shri Vasant Kumar Khakkar entered into Dr. B.R. Ambedkar International airport, Nagpur with Indian currency of ₹ 22,50,000/- on 18.05.2009 on his way to Sharjah by taking on Flight No.G-9-410. It is pleaded by the Appellant that while screening of the baggage by CISF, the Indian currency was detected and on information to the Customs Department, the same was seized. Thus the argument by the learned Advocate for the Appellant that since the Appellant has not taken their boarding pass by checking-in, nor completed the security and reached the Customs counter, hence detection of currency at the stage of screening of the baggage could at best be considered as preparation but not an attempt to export of the Indian currency out of the country. Any goods attempted to be exported or brought within the limits of Customs area for the purpose of being exported, contrary to the any prohibition, would result into confiscation. In the present case, the goods have been brought into the airport by the Appellant Shri Vasant Kumar Khakkar with an intention to take the same to Sharjah. However, on being detected while screening the baggage by CISF, it is their argument that he has expressed his desire to return back instead of continuing his journey, but the customs authorities seized the same. Therefore, their plea that the action of the Appellant has remained at the stage of preparation only and no attempt has been made to export the Indian currency out of India. Confiscation - HELD THAT:- Sub-sections (d) of Section 113 consists of two independent alternative situations viz. (1) the goods attempted to be exported and (2) or brought within the limits of any Customs area for the purpose of being exported. In the present case, undisputedly, both the conditions are present. The second situation prescribed under sub-section (d) is satisfied, inasmuch as both Shri Vasant Kumar Khakkar and Smt. Renuka Vasant Khakkar, in their respective statements submitted that the Indian currency was obtained by selling their jewellery by Shri Vasant Kumar Khakkar to Sharjah and for said purpose on 18.05.2009, the Indian currency was brought to Nagpur International airport a notified Customs area. Therefore, the confiscation of the Indian Currency of ₹ 22.50 lakhs under Section 113 (d) of the Customs Act, 1962 is justified. Penalty on the Appellant Shri Vasant Kumar Khakkar - HELD THAT:- There are enough material/evidence to come to the conclusion that Shri Vasant Kumar Khakkar has contravened the provisions of the Customs Act, 1962 and aware of the law being a frequent traveller that the Indian currency was carried by him in violation of Provisions of Section 113(d) of the Customs Act, 1962 read with Regulation 3 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 framed under Section 6(3)(g) read with Section 47 of Foreign Exchange Management Act, 1999 - the quantum of penalty is however reduced. Penalty on Smt. Renuka Vasant Khakkar - HELD THAT:- There are no justification for imposition of penalty on her only on the ground that she was aware that her husband Shri Vasant Kumar Khakkar would be carrying ₹ 22.50 lakhs to Sharhah, when she was no way concerned in obtaining permission nor in any manner associated to carry the said Indian currency without seeking necessary permission from the appropriate authorities in compliance of various provisions of law necessary to carry huge amount of Indian currency to Sharjah - penalty on Smt.Renuka Vasant Khakkar is set aside. Appeal allowed in part.
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2019 (11) TMI 69
Imposition of penalties on CHA u/s 114(i) of Customs Act, 1962 - Custom House Agent allowed unauthorized use of their licence - Duty Drawback on export goods - over-valuation of goods - HELD THAT:- The exporter was proceeded against for claiming drawback on exports declared to be valued much higher than the actual procurement price. From this it should be apparent that the condition of the goods or any other physical characteristics, which an agent or its employee may be privy to, is not the subject of controversy - There is no allegation that the goods of a different description or of apparently of poor quality had been shipped but that the value of the goods has been inflated. In these circumstances, the penalties imposed on M/s HP Joshi Co and Shri Ashwin Joshi under section 114(i) of Customs Act, 1962 would not sustain. The charge against Shri Ashwin Joshi was based upon a statement of Shri Shilpesh Ramakant Sawant which, despite retraction, was held to be relevant as the retraction claiming use of force was not corroborated with any other evidence of having been compelled. Thus, a proposition, which fails the test of reasonableness, must be corrected by evidence but a statement of retraction does not have to be. The findings that follow from this assumption on the part of adjudicating authority evidently lacks reason and logic. Therefore, the penalties imposed on the custom house agent, M/s HP Joshi Co, and Shri Ashwin Joshi fail. Imposition of penalties on Shri Kiran Vohra and Shri Iqbal Mehra - HELD THAT:- In the absence of any material evidence that could overcome the findings of the original authority in favour of Shri Kiran Nagindas Vohra and of any material that could support the findings against Shri Iqbal Mohan Amritlal Mehra, without reference to the statements alone, the penalties against them will not sustain. Penalties set aside - appeal allowed - decided in favor of appellant.
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2019 (11) TMI 68
Maintainability of appeal in terms of Section 129D of CA - Committee of Chief Commissioners vide review order have directed the Commissioner of Customs for filing of appeal before the Tribunal; whereas, the appeal in the present case was filed before the Tribunal under the signature and seal of the Deputy Commissioner of Customs - HELD THAT:- Instead of the said designated/specified officer, the appeal in this case has been signed and verified by the Deputy Commissioner of Customs. Since, in terms of Section 129D ibid, the Committee of the Chief Commissioners have reviewed the matter and directed the concerned officer for filing of appeal before the Tribunal, such direction cannot be considered as empty formality and has to be strictly adhered to for the purpose of achieving the legislative mandate. It has been consistently held that in absence of any specific authority being delegated under the statute, the proper officer who has been entrusted with the job for filing the appeal should only sign the appeal records including the verification memo contained in the appeal memorandum - But in the present case, since the proper officer i.e. Commissioner of Customs has not preferred the appeal by himself in the manner prescribed in the statute, we are of the view that the appeal filed by Revenue cannot be maintained on ground lack of jurisdiction. Appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2019 (11) TMI 67
Maintainability of application - initiation of CIRP - Corporate Debtor failed to pay the due payable financial debt - whether the debt falls within the meaning of 'Financial Debt' in terms of Section 5(8) of the Code of 2016? HELD THAT:- As per Section 3(8) of the Code of 2016, a CD means a corporate person who owes a debt to any person, and as per Section 3(7), a corporate person is a company, a LLP or any other person, but shall not include any financial service provider. That is to say that since a financial service provider is excluded from the definition of corporate person , it can also not be a CD. Further, since Part 2 of the IBC applies to Insolvency Resolution and Liquidation for corporate persons , and since a financial service provider, including an NBFC, is excluded from the definition of a corporate person and CD, provisions of Part 2 of the IBC do not become applicable in the case of a financial service provider. Hence, no creditor can seek initiation of corporate insolvency resolution process against any financial service provider. We are in agreement with the arguments presented by the respondent CD and consider it as a financial service provider and a Non-Banking Financial Institution, being registered as such by the RBI, and that for this reason it falls outside the purview of section 7 of the Code of 2016. Thus even though it owes a debt to the petitioner FC, the prayer of the FC for initiation of CIRP in respect of M/s. Purbanchal Trade and Industries Ltd. fails. Petition dismissed.
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2019 (11) TMI 66
Maintainability of application - extension of the period of completion of Insolvency Resolution Process - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On the ground that the Resolution Professional has wrongly decided the claims of the Appellant Banks by rejecting their claims, the application under Section 60(5) was preferred by the Appellants, which according to the Appellants have not been properly adjudicated by the Adjudicating Authority. The impugned order dated 25th July, 2018 fell for consideration before this Appellate Tribunal in COMMITTEE OF CREDITORS OF AMTEK AUTO LTD. AND LIBERTY HOUSE GROUP PTE LTD. VERSUS MR. DINKAR T. VENKATASUBRAMANIAN ORS. AND LIBERTY HOUSE GROUP PTE LTD. VERSUS THE COMMITTEE OF CREDITORS OF AMTEK AUTO LTD. ANR. [ 2019 (8) TMI 877 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] wherein this Appellate Tribunal noticed that the plan which was approved in favour of M/s. Liberty House Group Pte Ltd. ( Successful Resolution Applicant ) was not acted upon. When the question of implementation of the approved Resolution Plan of M/s. Liberty House Group Pte Ltd. was taken up by the Resolution Professional , it was stated that in spite of e-mail sent on 5th September, 2018 and detailed e-mail on 12th September, 2018, no favourable response was received by M/s. Liberty House Group Pte Ltd. whose plan has been approved by impugned order dated 25th July, 2018. The liquidator is now required to collate and settle the claim(s) as empowered under Section 35 (j), after access of information under Section 37 thereafter required to consolidate the claim under Section 38 and after verification of claims under Section 39 may either admit or reject the claim or part thereof under Section 40. Thereafter, if any person aggrieved against the decision of the liquidator may prefer an appeal under Section 42 before the Adjudicating Authority. It is not required to pass any order on merit as the matter is required to be determined afresh by the liquidator - appeal disposed off.
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Service Tax
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2019 (11) TMI 65
Valuation - non-inclusion of policy administration charge collected from recipients of life insurance service in the assessable value - Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- It is seen from the records that the appellant, having been served with one show cause notice on 23rd August 2007, proposing to recover tax liability on the consideration as provider of banking and other financial services , taxable under section 65(105)(zm) of Finance Act, 1994, for the period from 1st April 2004 to 31st March 2007, was given relief, which dropped proceedings. Extended period of limitation - HELD THAT:- Palpably, the period for which recovery has been confirmed would be within the sanction of law only if extended period was so invoked. In the light of the transactions of the appellant having been subject to scrutiny and proceedings initiated on the earlier occasion, the notice was precluded from seeking recovery beyond the normal period prescribed in section 73 of Finance Act, 1994 - As the period covered in the present show cause notice is 2007-08 and the notice was issued in 2013, the demand fails to overcome the bar of limitation. The appeal is allowed without dilating on the submissions pertaining to scope of the taxing entry.
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2019 (11) TMI 64
CENVAT Credit - denial on the ground that the appellant has failed to produce the documents on the strength of which they have availed cenvat credit - time limitation - HELD THAT:- The appellant availed cenvat credit in the financial year 2008-09 and 2009-10 and in March 2010, the closing balance of cenvat credit lying in their cenvat credit account was ₹ 1,58,07,543/- and the same was opening balance on 01.04.2010. Further, the appellant started utilizing the said cenvat credit from October 2010 onwards. In that circumstances, the show cause notice issued on 21.04.2016 is highly time barred i.e. beyond the period of limitation of 5 years. Therefore, the proceedings against the appellant are not sustainable - the availment of cenvat credit at this stage cannot be disputed by the revenue - Credit allowed. CENVAT Credit - denial of cenvat credit on the ground that at the time of issuance of invoices were in the name of the appellant located at Ludhiana whereas the appellant was registered at Mohali Punjab in the jurisdiction of Mohali Range - HELD THAT:- It is not disputed that the CBSL Cable is the same which is registered with the department and the appellant has availed the services and paid service tax thereon, in that circumstances, the cenvat credit of ₹ 7,41,600/- cannot be denied to the appellant. Therefore, the same is admissible to the appellant. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 61
CENVAT Credit - common input services, used for providing the taxable output services and for the exempted service - Non-maintenance of separate records - sub-rule (3) of Rule 6 of CCR - HELD THAT:- The fact is not under dispute that the appellant had reversed an amount of ₹ 2,66,487/- and also paid interest amounting to ₹ 1,47,059/- in respect of the irregular cenvat credit availed for the services provided by M/s. Prithvi Caf at Juhu - Since the appellant had reversed the cenvat credit and also paid interest before issuance of show cause notice, such reversal of credit should be construed as non-availment of cenvat credit and in such eventuality, the restrictions contained in Rule 6 ibid would not be applicable. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 60
Imposition of penalty u/s 76 and 78 of FA - appellant had only deposited a part amount before the issuance of SCN - HELD THAT:- The major part of the demand was deposited by the appellant prior to the issuance of the show cause notice. As such penalty required to be imposed under Section 78 was only to the extent of the amount not deposited by them. The Original Adjudicating Authority had given an option to the appellant to deposit 25% of the penalty within a period of one month from the date of passing of the order. As such deposit of 25% of the balance amount as deposited by the appellant, as penalty under Section 78 is appropriate. There is no dispute about the fact that the services provided by the appellants were Works Contract Service and as such switch over to the said services for payment of service tax which was in the knowledge of the Revenue also cannot be held to be with any mala fide. The only lapse on the part of the appellant was that they did not get their registration certificate amended - However, appellant has already deposited duty plus 25% penalty on balance duty which was deposited after the order, the balance amount of penalty imposed upon them under Section 78 is set aside. Penalty u/s 76 of FA - HELD THAT:- It is well settled law that both the penalties i.e. under Section 76 and 78 cannot be imposed simultaneously - Penalty u/s 76 set aside. Appeal allowed in part.
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2019 (11) TMI 59
Principles of Natural Justice - no effective personal hearing was granted to the appellant before deciding the matter afresh - HELD THAT:- The de novo adjudication proceedings were not completed in proper manner inasmuch as the findings recorded in the order dated 12.08.2014 of the Tribunal has not been properly adhered to. Therefore, the matter should again be remanded to the original authority for a fresh fact finding on all the issues involved in the case. Accordingly, the matter is remanded to the original authority for re-adjudication. The appeal is allowed by way of remand to the original authority.
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2019 (11) TMI 58
Maintainability of appeal - time limitation - condonation of delay - appeal was filed on 04.06.2013 i.e. after a period of 3 months and 20 days, whereas the normal period of filing the appeal is 2 months and he has powers to condone further delay of one month only - HELD THAT:- Whether the Commissioner (Appeals) has jurisdiction to condone the delay beyond the period prescribed under the Act stand decided by Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] where it was held that because of lack of experience in business there was delay, is not a adequate reason, delay not condoned. Inasmuch as admittedly there was a delay of one month and 20 days in filing the appeal, Commissioner (Appeals) has rightly rejected the same as barred by limitation - Appeal dismissed - decided against appellant.
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2019 (11) TMI 57
Refund claim - time limitation - Section 11B of Central Excise Act - doctrine of merger - Whether the provisions of Section 11B(5)(ec) or Section 11B(5)(f) of the Central Excise Act, 1944 are applicable in case where the Order-in- Original is challenged inasmuch as the levy of penalty and such levy of penalty is set aside by the Appellate Authority? - Whether under the facts and circumstances of the case, the Order-in-Original passed by the Respondent adjudicating authority merges with the Order-In-Appeal passed by the Commissioner of Central Excise(Appeals)? HELD THAT:- The actual liability would be determined subsequent to the order of the Appellate Authority. On the liability created towards the penalty, the amount in balance deposited by the assessee would have been appropriated/adjusted. No question of refund would have arisen if no appeal was preferred by the assessee though relating to the penalty aspect. The actual liability is crystallized subsequent to the order passed by the Appellate Authority. The doctrine of merger being applicable to the case on hand to determine the actual liability and to raise the demand, the relevant date in terms of Section 11B (1) of the Act would be 03.03.2010, the date of passing of the order by the Appellate Authority. The view of the respondent-revenue in denying the refund claimed by the appellant is unjustifiable and hit by Article 265 of the Constitution of India. The substantial questions of law answered in favour of the assessee and against the revenue.
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Central Excise
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2019 (11) TMI 56
CENVAT Credit - duty paying documents - Department entertained a view that the Bills of Entry having not been issued or consigned to the appellant herein is not a valid document for availing credit as per Rule 9 of CENVAT Credit Rules, 2002 - HELD THAT:- The department does not dispute that the appellant have used the inputs in the manufacture of final products and also the duty paid character of the documents. The only allegation is that the bills of entry contain the name of HUL and not that of the appellant. It is pertinent to note that HUL has given a separate declaration to the effect that the goods are to be sent directly to the appellant s premises and that credit would be taken by the appellant. The provisions contained in Rule 9 does not make any requirement that the name of the person who is availing the credit has to be mandatorily mentioned therein. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 55
Refund of Excise duty - benefit of N/N. 6/2006-CE dated 1st March 2006 - rejection on the ground that the impugned notification is limited to supplies for the initial setting up of water treatment plants , that only by subsequent clarification of Central Board of Excise Customs in circular no. 354/34/2008-TRU dated 14th March 2008 was exemption extended also for replacement of pipes that the goods had been supplied to the project contractor. HELD THAT:- The pipes had been deployed in connection with providing water supply. It is also noted that the appellant initially paid duty and the present proceedings relates to claim for refund of that duty. The prescribed certificates have been issued by a responsible government authority and incorporates details of the project. While the wording of the certificate could be amenable to different interpretation, it is apparent that the objective of the notification leaves no room for ambiguity and the furnished certificates should have sufficed as compliance. The first appellate authority has noted lack of absence of certain documentation. In order that lack be remedied, we set aside the impugned order and remand the matter back to the original authority with a direction to expedite the further proceedings in relation to the refund claim only on the bar of unjust enrichment and, in the face of our finding on the sufficiency of compliance of the conditions, allow the refund to the appellant - appeal allowed by way of remand.
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2019 (11) TMI 54
Availment of CENVAT Credit - paints cleared by them to themselves only for the purpose of carrying out the services at the site of HPCL - HELD THAT:- Admittedly, paint is one of the requisite input on which the appellant is entitled to avail the credit . If the appellant would have purchased the paint from any other source, they were entitled to avail the credit of the duty paid on the said input. Merely because the appellant themselves are the paint manufacturers and raised invoices in their own name but for HPCL site, they cannot be denied the Cenvat credit of duty paid by them. Admittedly, the appellant was acting in dual capacity i.e. as manufacturer and also service provider. As a manufacture he had cleared the goods on payment of duty and as a service provider, he has availed the credit, which is available for further utilisation for payment of service tax or for payment of duty of excise. No merits are found in the Revenue s contention raised otherwise. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 53
CENVAT Credit - input services - outward transportation on FOR destination sales - denial on the ground that place of removable is the factory gate and no cenvat credit is available to the assessee beyond the place of removal i.e factory gate - HELD THAT:- The appellant is entitled to avail Cenvat credit on outward transportation service as the appellants themselves are consignee to the goods, till the goods reaches upto the factory gate of the buyer. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (11) TMI 52
Refund of un-utilised CENVAT Credit - total amount of claim had been reduced by applying the formula prescribed under Rule 5 of CENVAT Credit Rules, 2004 - Cash refund relating to the segments and castings were rejected on the ground that the same were capital goods - HELD THAT:- This Tribunal for the earlier period in M/S. COGNIZANT TECHNOLOGY SOLUTIONS VERSUS CCE ST (LTU) , CHENNAI [ 2016 (2) TMI 580 - CESTAT CHENNAI] , held that the formula adopted by the Revenue is incorrect having two values in the numerator and the denominator. Pursuant to the said remand order, the Adjudicating authority has adopted the FOB value in the numerator as well as in the denominator. Therefore, the present appeals are also remanded to the Adjudicating authority to calculate the refund claim by adopting the uniform value in the numerator as well as the denominator of the formula prescribed under Rule 5 of CENVAT Credit Rules, 2004. Admissibility of CENVAT Credit - segments and castings HELD THAT:- Undisputedly, it is classified under Chapter sub-heading 84399100 of Central Excise Tariff Act, 1985 as capital goods . Merely because the said capital goods gets exhausted after it is used in grinding the materials of approximately 150 MTs, it cannot be classified as an input used for manufacture of finished goods viz. Bagassae Board falling under Chapter 44 of Central Excise Tariff Act, 1985. Thus, the cash refund of ₹ 3,69,874/- on the Segments has been correctly denied under Rule 5 of CENVAT Credit Rules, 2004 and accordingly not admissible to the Appellant. The impugned order is modified to the extent of remanding the matter relating to redetermination of cash refund applying the correct formula - Appeal allowed by way of remand.
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2019 (11) TMI 51
Refund of CENVAT Credit - excess amount paid on inter-unit transfer of goods - provisional assessment - the appellant reversed the credit under protest and filed a refund claim - refund rejected on the ground of limitation and unjust enrichment - HELD THAT:- The appellant had placed sufficient evidences to support their claim that the amount has not been collected from their customers, in the form of Cost Accountant s certificates, respective Balance Sheet etc. However, the learned Commissioner (Appeals) without analyzing/scrutinizing these evidences simply held that the appellant was not able to establish that the burden of duty has not been passed on to others. In these circumstances, there are no other option but to set aside the impugned order and remand the matter to the learned Commissioner (Appeals) with a direction to analyze the Balance Sheet, Cost Accountant certificates to ascertain whether the burden of duty of ₹ 58,28,436/- has been passed on to others or otherwise - appeal allowed by way of remand.
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2019 (11) TMI 50
Maintainability of appeal - deposit for pre-condition for filling the appeal - interest on pre-deposit - time limitation - HELD THAT:- The Appellant contested the claim of interest on 30.06.2017 with three reminders given to the Department on various occasions. After entertaining the claim of interest of the Appellant, the Appellant was advised to file an appeal against the order dated 22.06.2017 before the learned Commissioner (Appeals) on 14.11.2017 and thereafter appeal was filed on 08.12.2017 which shows that the claim of interest was asked to the Appellant to file before the learned Commissioner (Appeals) against the order dated 22.06.2017 - the appeal filed on 08.12.2017 is within time as the cause of action for filing the appeal arose on 14.11.2017 when the Appellant was asked to file the appeal. The learned Commissioner (Appeals) has not decided the issue of merits - matter remanded back to the learned Commissioner (Appeals) to decide the issue on merits - appeal allowed by way of remand.
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2019 (11) TMI 49
CENVAT Credit - common input services used for trading and manufacturing activities of the company - exempt trading services - non-maintenance of separate records - Rule 6(3(A)) of CCR, 2004 - HELD THAT:- In view of the settled position that if the respondent has not utilized the CENVAT credit and has paid the duty prior to the issuance of the show-cause notice, then they are not required to pay interest and penalty in view of the decision of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ] - there is no infirmity in the impugned order dropping the penalty - Appeal dismissed - decided against Revenue.
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2019 (11) TMI 48
Recovery of the wrongly availed CENVAT Credit - raw material imported on payment of CVD and SAD - Since the disputed goods, i.e., CARTAP was not used for the intended purpose in the factory of manufacture of final product, the department contended that taking of cenvat credit of CVD and SAD paid on such disputed goods is not proper and justified. HELD THAT:- It is an admitted fact on record that out of the disputed amount of cenvat credit of ₹ 14,87,490/-, the appellant had paid duty amounting to ₹ 13,26,000/- on the basis of normal transaction value determined by it in terms of Rule 7 of the Central Excise Valuation Rules. The remaining amount of ₹ 1,61,525/- was subsequently reversed from the cenvat account. Thus, the credit availed by the appellant in respect of the raw material dispatched to its sister unit was entirely reversed/paid. Under the circumstances, it cannot be said that the amount of cenvat credit can again be recovered. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 47
CENVAT Credit - input services - denial of credit of service tax paid on input services transferred to them by their head office through ISD invoice in respect of (a) Air Travel services, (b) Repair and Maintenance services and (c) Annual Maintenance Charges (AMC). Air travel services - denial on the ground that the travel was for personal benefit of employees - HELD THAT:- It is not in dispute that air travel services are not entirely excluded from the benefit of Cenvat credit. They get excluded only if they are meant for personal use of officers. This fact has not been established by the revenue in the SCN or in the OIO or OIA. From the sample invoices which have been produced, the travel in question was for official work. Accordingly, I allow credit of service tax paid on air travel services. Repair and maintenance services - AMC services - HELD THAT:- Undisputedly both these pertain to contracts which involved both supply of material and rendition of services and therefore, can be considered as works contract services. However, the input invoices paid the amounts under different heads. They have not paid it under works contract services. The classification of any goods or services at the input invoice stage cannot be altered while deciding eligibility of credit to the recipient. Therefore, the classification cannot be altered in this case as well - In this case, the works contract services pertain to, as was seen by me from the sample invoices, either maintenance of office equipment or cleaning of carpets, etc., which were used at the head office - the appellant is entitled to Cenvat credit on these services as well. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (11) TMI 46
Maintainability of appeal - non-compliance with the condition of pre-deposit - HELD THAT:- Counsel for the appellant prays for two months' time for fulfilling the condition of pre-deposit for maintaining his appeal - Mr.Ajay Jagga, counsel for UT has no objection to the grant of such time. The present appeal is disposed of with a direction that in case the appellant deposits the required 25 per cent of the additional demand on or before 31.12.2019, then the appeal shall be entertain and decided on merits by the First Appellate Authority.
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2019 (11) TMI 45
Validity of re-assessment order - validity of endorsement issued on the rectification application filed by the petitioner - rejection of application on the ground that the said sub-contractor M/s. SSPDL Interserve Pvt. Ltd., is located in Chennai [Tamil Nadu] and as such no deduction can be claimed - HELD THAT:- Merely for the reason that the head office of company is at Chennai, the prescribed authority has rejected the claim of the petitioner inasmuch as deduction towards sub-contractor s turnover. The same requires re-consideration by the prescribed authority. The matter is restored to the file of the respondent-authority to redo the re-assessment in accordance with law, taking into consideration all the documents placed on record by the assessee-petitioner, after providing an opportunity of hearing to the petitioner.
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Wealth tax
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2019 (11) TMI 44
Jewellery estimation - Revised valuation in respect of all the items of jewellery whether or not covered by the FIRs - reduced value of the jewellery for the purpose of determining the net wealth of the assessee and passed the assessment orders - valuation figures as supported by valuation report of Registered Valuer and WTO - HELD THAT:- In respect of the value of such items of jewellery as are not covered by the FIR, it occurs to our mind that there is inherent inconsistency in the approach of the Ld. CIT(A), because while referring to schedule III of the Act in the light of Section 7 read with Rule 18 thereof, CIT(A) made an observation that the jewellery shall be valued on the estimation of the price which it would fetch if sold in the open market on the valuation date. If it would be so, we do not find any logic in the CIT(A) directing AO to take the higher value as per the valuation report by ignoring the items the revised the value of which is less than the returned value. Further in the case of CWT vs. Raghunath Singh Thakur [ 2008 (4) TMI 152 - HIMACHAL PRADESH HIGH COURT ] held that where assessee s valuation figures are supported by valuation report of Registered Valuer and WTO has not made a reference to valuation cell, then the assessee s figures are required to be accepted. Insofar as the items of jewellery covered by the FIR, the assessee is bound by the valuation secured by the Hon ble High Court and the assessee cannot seek to reopen the same. Insofar as the items of jewellery not covered by FIR, however, the Revenue is expected to take a consistent stand in respect of all the items thereof and in view of the settled position of law, the assessing officer is directed to consider the revised valuation secured by police or by the assessee, as the case may be, and submitted by the assessee. Appeal of the assessee is, accordingly, allowed in part.
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Indian Laws
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2019 (11) TMI 43
Guilty of professional misconduct on the part of Chartered Accountant - Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 - statutory auditor or not - whether KNA is guilty of any professional misconduct? HELD THAT:- KNA was appointed as an auditor of TIL for auditing the accounts for the financial year 2009-2010. It appears that on becoming aware that TIL was proposing to pass a resolution to appoint another auditor (KNA), the petitioner sent a letter dated 13.09.2011 to TIL, asserting that the petitioner continued to hold office as an auditor and alleging that appointment of any statutory auditor would be illegal. In the same breath, the petitioner also stated that it is not known who the present auditor of TIL is, as respondent no. 6 (Manu Sharma) had allegedly disclaimed that he was appointed as an auditor of TIL. Thus, the petitioner was fully aware that another auditor was to be appointed by TIL at the AGM to be held on 30.09.2011. Whether KNA or its constituent partner, CA Alok Shukla, was guilty of professional misconduct on account of not obtaining a NOC from the petitioner? - HELD THAT:- The Board held that KNA was not guilty of any professional misconduct as alleged, as the petitioner was not the previous auditor with which KNA was required to communicate before accepting the assignment to audit the accounts of TIL. It is relevant to note that there is no requirement for an auditor to secure a no objection from the previous auditor. Therefore, the premise that respondent no.3 required to obtain a no objection certificate from the petitioner, is fundamentally flawed. The only requirement is that the Chartered Accountant, who accepts the position as an auditor, must communicate with the previous auditor about the same. In the present case, the accounts filed with the Registrar of Companies for the years 2006-07 to 2008-09, that is, for the three years prior to the period for which KNA was appointed, had been audited by M/s Manu Sharma and Co. and therefore, there was no necessity for KNA to correspond with the petitioner, since the petitioner was not the previous auditor of TIL - the petitioner was not appointed as an auditor for the financial year 2007-08. The assertion made by the petitioner that it continued to be a statutory auditor of TIL for the said period, is incorrect. This Court finds no infirmity with the impugned order. It is also relevant to note that the complaint filed by the petitioner is, essentially, motivated on account of inter se disputes between the petitioner and TIL. The entire correspondence placed on record clearly indicates that the petitioner had made all efforts to dissuade other Chartered Accountants from taking up the assignment to audit the accounts of TIL. This, clearly, is not the object of requiring an auditor to correspond with the previous auditor. It is also material to note that the petitioner is not associated with TIL as an auditor since 2008. The present petition is dismissed with costs quantified at ₹25,000/-.
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