TMI Tax Updates - e-Newsletter
December 17, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. Recent Advance Rulings

   By: PRABHAKAR KS

News

1. Centre will not renege on GST compensations: Sitharaman

2. India Among top 10 Improvers in EODB; India Ranks 63 RD Among 190 Countries

3. Fifth meeting of the Economic Advisory Council of the Fifteenth Finance Commission held today

4. Extension of date of Direct Tax payment in respect of third installment of advance tax for FY 2019-20

5. FM holds Pre-Budget Consultation with representatives of Financial Sector and Capital Markets

6. FM holds first Pre-Budget Consultations with the representatives of Digital Economy, Fintech and Start-Ups

7. Year End Review -2019 of Ministry of Corporate Affairs

Notifications

GST - States

1. 26/2019 - State Tax (Rate) - dated 25-11-2019 - Chhattisgarh SGST

Seeks to insert explanation regarding Bus Body Building in Notification No. 11/2017-State Tax (Rate) dt. 28.06.2017

2. Order No. 8/2019 - State Tax - dated 19-11-2019 - Chhattisgarh SGST

Chhattisgarh Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019

3. 56/2019-State Tax - dated 19-11-2019 - Chhattisgarh SGST

Chhattisgarh Goods and Services Tax (Seventh Amendment) Rules 2019

4. G.O. (Ms) No. 183 - dated 22-11-2019 - Tamil Nadu SGST

Seeks to amend Notification No. II(2)/CTR/532(d-14)/2017, dated the 29th June, 2017

5. G.O. Ms. No. 182 - dated 18-11-2019 - Tamil Nadu SGST

Tamil Nadu Goods and Services Tax (Eighth Removal of Difficulties) Order 2019

6. G.O. (Ms) No. 181 - dated 18-11-2019 - Tamil Nadu SGST

Tamil Nadu Goods and Service Tax (Seventh Amendment) Rules 2019

Highlights / Catch Notes

GST

• Mathematical method for profiteering inapplicable when tax rate is reduced and ITC allowed in packaged foods case.

  Case-Laws - NAPA : Profiteering - packaged foods - The mathematical methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been reduced and ITC allowed - The profiteered amount determined - Respondent directed to reduce his prices and/or deposit the amount as determined in the CWF.
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• NAPA's Authority Over Packaged Foods Profiteering Upheld; Objections Deemed Frivolous and Unsupported by Law Under CGST Act and Rules.

  Case-Laws - NAPA : Profiteering - packaged foods - Jurisdiction of NATIONAL ANTI-PROFITEERING AUTHORITY (NAPA) - the above power has both legislative sanction as well as incorporation in the CGST Act, 2017 and the CGST Rules, 2017. The delegation provided to this Authority under the above Section and Rule is clear, precise, unambiguous and necessary and is well within the provisions of the Constitution and therefore, it has been rightly conferred on this Authority. Hence, the objections raised by the Respondent in this regard are frivolous and without legal force.
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Income Tax

• Assessee's Revised Tax Return to Withdraw TDS Credit and Adjust Professional Income Deemed Lawful for 2009-10, 2014-15.

  Case-Laws - AT : Revised return - withdrawing the claim of TDS credit and reduction in corresponding professional income - Since the assessee is accounting his professional (actor) income on cash basis, the entire receipt including TDS has to be assessed in the respective assessment year. Therefore, the addition made in assessment year 2009-10 and 2014-15 are in accordance with law.
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• Tax Deduction Denial u/s 54F Overturned; Evidence of House Construction Validates Claim Within Timeframe.

  Case-Laws - AT : Deduction u/s 54F - dis-allowance on the ground that the construction of house was not completed within the stipulated period - once the assessee has produced the evidence in support of his claim of construction of new residential house and house was actually constructed as existed at the plot of land, then the claim of the assessee cannot be denied on mere suspicion or doubt.
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• Revised return u/s 139(5) rejected; revised sales figure must be considered, original return disregarded.

  Case-Laws - AT : Revised return u/s 139(5) rejected - Revision in the sales figure - in a case assessee files the revised return then it is to be taken into consideration for the purpose of making an assessment and the original return cannot be adverted.
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• Court Rules on Capital Gains: Non-mention of Boundary Wall in Sale Deed Doesn't Prove Its Non-existence.

  Case-Laws - AT : Disallowance of cost of construction cost of improvement of property while computing the Long Term Capital Gain - since it is a case of construction of boundary wall, therefore, the non-mentioning of the same in the sale deed will not ipso fact lead to the conclusion that boundary wall was not in existence on the plot of land.
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• Non-deduction of TDS on lease payments to Noida Authority makes payer liable u/ss 201(1) & 201(1A).

  Case-Laws - AT : Non deduction of TDS on such lease rental payment and interest to the Noida Authority - assessee-in-default - if such tax and interest are not paid by the NOIDA, the assessee cannot be exonerated from the liability u/s 201(1) and 201(1A).
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• Allocation of Cartage and Diesel Expenses Between Baddi and Noida Units u/s 80IC Reviewed by Tax Commissioner.

  Case-Laws - AT : Deduction u/s 80IC - allocation of the cartage expenses and diesel and oil expenses among two units - determination of the eligible profit - CIT(A) has rightly allocated the expenses and depreciation between the Badddi unit and the Noida unit.
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• Taxpayer-Stockist Relationship Not Subject to TDS: Principal-to-Principal, Not Commission, u/s 194H.

  Case-Laws - AT : TDS u/s 194H - Arrangements between the assessee and the stockiest for sale of goods is in the nature of principal to principal basis, but not in the nature of principal to agent and accordingly, amount paid by the assesee to stockists is not in the nature of commission, which is liable for TDS u/s 194H.
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• Penalty for Late Audit Report Filing u/s 271B Removed Due to Bona Fide Belief and No Exchequer Loss.

  Case-Laws - AT : Penalty levied u/s 271B - delay in furnishing audit report - bonafide belief - Delay in furnishing audit report has resulted only in technical venial breach which does not cause any loss to exchequer could be applied here also. - levy of penalty deleted.
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Customs

• Refund Claim Denied for Lack of Essentiality Certificates; No Appeal or Modification of Bill of Entry Assessments Noted.

  Case-Laws - AT : Refund - Benefit of N/N. 515/86-Cus. - Requirement of issuance of Essentiality certificates issued by the Oil Industry Development Board - the assessment made in the Bills of Entries was not appealed against by the appellant and also the said assessment had not been modified or altered by the assessing authority. - Refund claim rejected.
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Corporate Law

• High Court can hear winding up petition CP 1 of 2016 but proceedings paused pending NCLT decision on resolution plan.

  Case-Laws - HC : Winding up petition - Jurisdiction of High Court - This Court possesses the jurisdiction to hear out the winding up petition being CP 1 of 2016 along with all connected applications. However, the winding up petition and the connected applications thereto should not be proceeded with till NCLT comes to the conclusion as to whether the resolution plan in respect of the said company is either approved or rejected.
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Indian Laws

• Faridabad Courts Have Jurisdiction for Section 34 Petition Due to Execution and Arbitration Request Location.

  Case-Laws - SC : Territorial jurisdiction - the place where the cause of action having arisen - since the agreement was executed at Faridabad, part of the cause of action would arise at Faridabad, clothing Faridabad courts with jurisdiction for the purposes of filing a Section 34 petition. The second part of the reasoning is that Faridabad is the place where the request for reference to arbitration was received, as a result of which part of the cause of action arose in Faridabad, which ousts the jurisdiction of Courts of New Delhi, in which no part of the cause of action arose.
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Wealth-tax

• Late Wealth Tax Notice Invalid: Section 16(2) Deadline Missed, Section 42 Provisions Not Applicable.

  Case-Laws - AT : Wealth tax assessment - Notice itself has been issued beyond the time prescribed u/s 16(2) of the Wealth Tax Act. Thus, according to us the provision of section 42 does not apply to a situation where the notice has not been issued within the time limit prescribed as per the act.
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Service Tax

• Revenue's Extended Limitation Period Challenged: No Evidence of Suppression Found Post-Audit, Show Cause Notice Questioned.

  Case-Laws - AT : Extended period of limitation - Except mentioning in the show cause notice that there has been suppression of facts, no positive act committed by the appellant has been put forth by the revenue to allege suppression of facts in the impugned cases. The detection is subsequent to the audit - SCN was not required to be issued.
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• Excise Officials Questioned for Extending Investigation Beyond 18 Months Without Evidence of Fraud or Legal Justification.

  Case-Laws - AT : Extended period of limitation - It is not understood as to under what authority the Excise Officials had travelled beyond the period of 18 months to find out, if any Service Tax was due when they found no evidence of fraud, collusion, wilful misstatement, suppression of fact or contravention of the provision of the Finance Act or Rule within the statutorily prescribed 18 months
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Central Excise

• Appellant's Duty Payment Deemed Unsustainable: Section 11A(2B) and Rule 3 of CENVAT Credit Rules Involved.

  Case-Laws - AT : CENVAT Credit - stock transfer - the appellant shifted inputs and certain capital goods from Unit-II to Unit-I - The appellant has paid the duty voluntarily in terms of Section 11A(2B) of the Central Excise Act on being pointed out by the Preventive Officers and took the credit of the same in Unit-I in terms of Rule 3 of the CCR - The demand is not sustainable on merit as well as on limitation
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• Clandestine Removal Allegations Dismissed: Insufficient Evidence for Excess Sponge Iron Use Beyond Declared Amounts.

  Case-Laws - AT : Clandestine removal - excess usage of raw material Sponge Iron, than mentioned - the entire demand is based on mere average yield of production and no concrete evidence to manufacture the alleged goods has been brought on the record by the department - charges of clandestine removal cannot be based on series of assumptions and presumptions.
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Case Laws:

• GST

• 2019 (12) TMI 588
  Profiteering - packaged foods - Jurisdiction of NATIONAL ANTI-PROFITEERING AUTHORITY (NAPA) - benefit of reduction in the GST rates that had not been passed on by him to the recipients - contravention of Section 171 of CGST Act, 2017 - penalty - HELD THAT:- The benefit of rate reduction has to be passed on by a registered person to the recipient on every supply of goods and services by commensurate reduction in the prices and in case it is not passed on the supplier shall be acting in contravention of the above provision. This Authority has been duly constituted under Section 171 (2) of the above Act and in exercise of the powers conferred on it under Rule 126 of the CGST Rules, 2017 it has notified the Procedure Methodology for determination of the profiteered amount vide its Notification dated 28.03.2018 and not on 19.07.2018 as has been claimed by the Respondent. However, the mathematical methodology for determination of the profiteered amount has to be applied on case to case basis depending on the facts of each case and no fixed formula can be set for calculating the same as the facts of each case are different. The mathematical methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been reduced and ITC allowed. The power under Rule 126 has been granted to this Authority by the Central Government as per the provisions of Section 164 of the above Act which has approval of the Parliament. Rule 126 has further been framed on the recommendation of the GST Council which is a constitutional body created under the Constitution (One Hundred and First Amendment) Act, 2016. Therefore, the above power has both legislative sanction as well as incorporation in the CGST Act, 2017 and the CGST Rules, 2017. The delegation provided to this Authority under the above Section and Rule is clear, precise, unambiguous and necessary and is well within the provisions of the Constitution and therefore, it has been rightly conferred on this Authority. Hence, the objections raised by the Respondent in this regard are frivolous and without legal force. It will also be appropriate here to mention that as per the provisions of Section 171 (2) of the above Act and the Rules framed under it, the Central Government has been empowered to constitute an Authority to examine whether ITCs availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of goods or services or both supplied by him. In exercise of the above power the Central Govt. has constitute this Authority vide Office Order No. 343/2017 dated 28th November, 2017 to ensure that both the above benefits are passed on to the customers. The profiteered amount is determined as Rs. 89,73,16,384/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide revised Annexure-16 of the supplementary Report dated 15.03.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 73,14,83,660/- (Rs. 89,73,16,383/- Rs. 16,58,32,723/- as he has already deposited an amount of Rs. 16,58,32,723/- in the CWF of the Central and the concerned State Government, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c ) of the above Rules alongwith 18% interest payable from the dates from which both the above amounts were realised by the Respondent from his recipients till the date of their deposit as per the revised Annexure-16 attached with the Report dated 15.03.2019. Penalty - HELD THAT:- The Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, he is liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a SCN be issued to him directing him to explain why the penalty prescribed under the above sub-Section should not imposed on him. Application disposed off.

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• Income Tax

• 2019 (12) TMI 628
  Undisclosed income introduced in the form of agricultural income - gross agricultural income shown by the assessee from the agricultural operation against which the assessee has claimed expenditure - expenditure claimed by the assessee is around 4.9% - HELD THAT:- CIT (A) has taken a reasonable percentage of 15% expenditure of the gross agricultural income and that too the agricultural income from agricultural operations excluding the income from sale of trees. Hence, in the facts and circumstances of the case as well as the prevailing conditions in the agricultural sector, the claim of the assessee cannot be accepted. The ld. CIT (A) has taken a reasonable view in estimating the expenditure at 15%.

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• 2019 (12) TMI 627
  Disallowance being commission paid to specified person / Director u/s 40A(2) - unreasonable and excessive expenditure - HELD THAT:- For making disallowance u/s. 40A(2) the onus is on the Revenue to show that payments made by assessee to persons referred in clause (b) are excessive or unreasonable with regard to fair market value of the goods or services received by the assessee. In the present case the authorities below have failed to examine terms and conditions of appointment of Shri Atul Kirloskar. If the terms of appointment allow payment of such commission at the time of appointment, the commission paid to Shri Atul Kirloskar is allowable, provided the commission paid is within the limits specified under Companies Act. We are of considered view that this issue needs revisit to the file of Assessing Officer for reexamination in the light of our above observations. The ground No. 1 of the appeal is thus allowed for statistical purpose. Disallowance of Aircraft expenses - AO disallowed 1/3rd of expenditure and depreciation on the ground that the Aircraft has been used for non-business purposes - Commissioner of Income Tax (Appeals) has restricted the expenditure to 25% - HELD THAT:- We observe that the issue of allowability of expenditure and depreciation on Aircraft was considered by the Tribunal in the past. The Tribunal [ 2017 (9) TMI 1832 - ITAT PUNE] for assessment year 2004-05 has restricted the disallowance of expenditure on Aircraft to 15%. Since, the facts in assessment year under appeal and reason for disallowance is identical, respectfully following the order of Tribunal in assessee s own case, we deem it appropriate to modify the findings of Commissioner of Income Tax (Appeals) on this issue and restrict the disallowance to 15%. Disallowance of Expenses u/s. 14A - HELD THAT:- The provisions of the Act or the Rules framed there under does not specify the manner of recording satisfaction u/s. 14A of the Act. The recording of satisfaction is subjective. The assessee has not made any suo-moto disallowance u/s. 14A for earning exempt income. After examining the assessment order we observe that the AO has recorded satisfaction before applying the provisions of Rule 8D. Hence, we do not find any merit in the contention of the assessee. Accordingly, the solitary issue raised in the appeal by the assessee is without any merit and hence, dismissed. Allowability of depreciation @ 60% on UPS and other allied items - HELD THAT:- In assessment year 2009-10 the Co-ordinate Bench has upheld the findings of Commissioner of Income Tax (Appeals) in allowing depreciation @ 60% on UPS and other allied items. Commissioner of Income Tax (Appeals) in assessment year under appeal has granted relief to the assessee by following its own order in assessment year 2009-10. We find no infirmity in the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 2 of the appeal is dismissed. Addition u/s. 14A - HELD THAT:- The Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that where the assessee is having both interest bearing funds and interest free funds, it is presumed that the investment are made by utilizing interest free funds. In the light of the facts and decision of Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. (supra), we restore this issue back to the file of Assessing Officer for recomputation of disallowance u/s. 14A of the Act. Accordingly, ground No. 3 of the appeal by Revenue is allowed for statistical purpose. Disallowance of commission u/s. 40A(2) - HELD THAT:- We find that this issue was considered by the Tribunal in appeal by Revenue in assessee s case in assessment year 2009-10. The commission paid to the Directors was allowed by the Tribunal. Hence, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 4 of the appeal is dismissed. Subsidy received by the assessee from Maharashtra Government under Package Scheme of incentive, 2001 - Revenue or capital receipt - HELD THAT:- We further observe that the Co-ordinate Bench in appeal by the Revenue [ 2019 (7) TMI 1149 - ITAT PUNE] has confirmed the findings of Commissioner of Income Tax (Appeals) in holding the sales tax benefit received by the assessee as capital receipt not liable to tax. Since, the facts in the assessment year under appeal are identical, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 5 of the appeal is dismissed.

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• 2019 (12) TMI 624
  Reopening of assessment u/s 147 - disallowance of depreciation and other expenses in respect of running of a boiler and turbine while computing the income under the head other sources on the ground that there were strong indication that neither the boiler nor the turbine were ready for the use up to 31.03.1992. - HELD THAT:- The proviso declares that where the original assessment was made under Section 143(3) of the Act, after scrutiny of the records, no action shall be taken after the expiry of 4 years from the end of relevant assessment year, unless the case attracts the exceptions provided by proviso to Section 147 of the Act. It is not the case of the Assessing Officer that material facts were either not disclosed or even after the same were sought for, were not furnished, and no new facts have been brought on record by the Assessing Officer. Respondent has disclosed fully and truly all the material facts necessary for the assessment by way of disclosing the hire income for the boiler and turbine and the interest cum income on deposits on share application money as well as claiming depreciation in respect of hired out boiler and turbine and by way of furnishing necessary documents before the Assessing Officer. CIT and the Appellate Tribunal, after considering the material on record have rightly held that notice under Section 148 of the Act issued on 03.04.1997, is bad in law as the same is not in accordance with the provisions of Section 147 of the Act.

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• 2019 (12) TMI 619
  Disallowance of Provision for Warranty - Disallowance of provision for stock obsolescence - HELD THAT:- CIT(A) was constrained to confirm the disallowances for want of details only. Hence, in the interest of natural justice, we are of the view that the assessee should be provided with one more opportunity to furnish the relevant details. Accordingly, we set aside the order passed by Ld CIT(A) in respect of both the above said issues and restore them to the file of the AO for examining them afresh by considering the details furnished by the assessee and for deciding both the issues in the light of decision rendered by the Tribunal in the assessee s own case in AY 2008-09. The assessee is also directed to furnish the details in support of the claims made to the satisfaction of the assessing officer. Whether the recovery of administrative expenses would form part of operating income for the purpose of computing operating profit margin? - To examine the correctness of the findings of the TPO, we examined the Annual Report and it is noticed by us from Schedule 13 to the P L Account that the above amount has been shown as Administrative expenses recovered which clearly indicates that the administrative expenses recovered are nothing but the reimbursement of the expenses incurred by the assessee for the above company and therefore, if such income is excluded from the operating revenue, corresponding expenses have to be excluded from the operating cost. Hence, we are in agreement with the submission of the assessee that the administrative expenses recovered to be considered as operating revenue, considering the fact that the TPO has not reduced corresponding expenses from the operating cost. The Assessing Officer is directed accordingly. The finding of the DRP is based on settled position of law and do not require any interference. Decided in favour of the assessee

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• 2019 (12) TMI 618
  Disallowance of business expenses from the remuneration earned by the assessee from the partnership firm assessed as business income u/s. 28 (v) - HELD THAT:- It is an admitted fact that in case of another partner such salary paid to the employees was allowed by the Ld. CIT(A) as an expenditure from the remuneration of the partnership firm. Further the payment of salary of the two employees is not in dispute. We, therefore, find merit in the argument of the Ld. Counsel for the assessee that the CIT(A) cannot alter the nature of expenditure. The Hon ble Supreme Court in the case of Ramlik Kothari [ 1969 (3) TMI 1 - SUPREME COURT] has held that expenditure incurred by the partner for earning income from the partnership firm is an allowable expenditure. The various other decisions relied on by the assessee in the case law compilation also supports his case. Further the rule of consistency also is in favour of the assessee, since in the preceding and subsequent years such salary paid to employees were allowed as business expenditure from the salary income received from the partnership firm. No proceedings u/s. 147 or 263 have been initiated in subsequent years after the order of the CIT(A), rejecting the claim of the assessee. In view of the above discussion we are of the considered opinion that the Ld. CIT(A) was not justified in upholding the disallowance made by the AO. Accordingly the order of the CIT(A) on this issue is set aside and the ground raised by the assessee on this issue is allowed. Addition under the head income from the house property - AO made addition on the ground that the assessee did not submit any documentary evidence in support of his claim that the premises was vacated by Sinclair Knight Merz Consulting (India) P. Ltd. - HELD THAT:- CIT(A) also the assessee did not give any supporting evidence that the premises was vacated by the said tenant for which he upheld the action of the AO. It is the submission of the assessee that given an opportunity the assessee is in a position to substantiate the claim by producing necessary evidence. 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 grant an opportunity to the assessee to substantiate with evidence to his satisfaction that the tenant had in fact vacated the premises for the intervening period.

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• 2019 (12) TMI 617
  Penalty levied u/s 271B - delay in furnishing audit report - HELD THAT:- The audit report was obtained within the due date prescribed u/s 44AB of the Act. The delay has occurred due to delay in filing return of income. The assessee has stated that it was under bonafide belief that the audit report could also be filed before 31.3.2015. There is also no dispute with regard to the fact that the audit report was available with the assessing officer before he completed the assessment. Delay in furnishing audit report has resulted only in technical venial breach which does not cause any loss to exchequer could be applied here also. Accordingly, following the above said decision of Cochin bench of Tribunal, we set aside the order passed by Ld CIT(A) and direct the AO to delete the penalty levied u/s 271B of the Act for the year under consideration. - Decided in favour of assessee.

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• 2019 (12) TMI 613
  Addition as rental income by adding security deposit - assessee has declared rental income only for six months and has not declared rental income for the balance six months - tenants did not pay the rent and raised dispute before the court - HELD THAT:- Since the tenants have filed suit before the Hon ble High Court for recovery of security deposit, then the assessee could not have adjusted the security deposit towards it unrealised rent. We further find that in A.Y 2016-17, the assessee has included Rs. 63.36 lakhs in it profit and loss account after the decision of the Hon ble High Court of Delhi. In our considered opinion, the action of the Assessing Officer is not acceptable and since the ld. CIT(A) has upheld the action of the Assessing Officer, both the lower authorities have erred in making the addition and sustaining the addition. Addition is unwarranted and deserves to be deleted. Accordingly, Ground No. 2 is allowed. Disallowance on account of depreciation on car and interest on car loan - allowable revenue expenses - HELD THAT:- Depreciation has been claimed by the assessee on the written down value of the asset which means that in earlier years, the asset was used for the purposes of business. Nowhere the Assessing Officer has brought any material evidence on record to suggest that there is a closure of business activities. On the contrary, we find that in furtherance of its business activities, the assessee has further advanced Rs. 65 lakhs towards land at Chandan Hola, Delhi which means that the assessee was, in fact, carrying out business activities during the year under consideration. The Hon ble High Court of Delhi in the case of Capital Bus Service [ 1980 (2) TMI 69 - DELHI HIGH COURT] has held that the only condition for allowability of depreciation is that the business should not have been closed out once for all and that the assessee should demonstrate that hopes of the business being revived are alive and real. Assessee was in fact, engaged in furtherance of its business activities and, therefore, it cannot be said that the assessee has closed down its business once for all. Therefore, the assessee is eligible for claim of depreciation. Similarly, interest on car is also coming from earlier years as the money was borrowed in earlier years. Therefore, in our humble opinion, there cannot be any disallowance for want of any business activity as the assessee was very much engaged in its business activities. The Assessing Officer is accordingly directed to delete the addition

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• 2019 (12) TMI 612
  Provisions of Section 50C applicability even prior to 1st October, 2009 in respect of transaction which took place prior to 1st October, 2009 - AO was of the opinion that the provisions of Section 50C of the Act should be invoked in the present transactions, accordingly he completed the assessment by adopting guideline value prescribed in the said properties as deemed consideration - HELD THAT:- The provisions of Section 50C of the Act have come into vogue w.e.f. 01.10.2009 and clearly states that the provision will come into effect from 01.10.2009. Further, the CBDT Circular No.5/2010, dated 03.06.2010, has also clearly explained that the provisions of Section 50C of the Act will come into effect from 1st October, 2009 and it is further clarified that the provisions of Section 50C have no application in respect of transaction which are not registered with the registration authorities. The Hon ble Jurisdictional High Court in the case of CIT vs. R. Sugantha Ravindran [ 2013 (3) TMI 271 - MADRAS HIGH COURT] held after introduction of the words or assessable after the words adopted or assessed , such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of section 50C. Thus, such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence, the assessee s transfer admittedly made earlier to such amendment cannot be brought under section 50C. Appeal filed by the Revenue stands dismissed.

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• 2019 (12) TMI 611
  Penalty u/s 272A(2)(c) - non-compliance of notice u/s 133(6) - failure on Assessee s part to furnish certain details as were sought by the A.O vide his notice issued under Sec.133(6) - HELD THAT:- As is discernible from the order passed by the Jt. CIT, Mumbai, u/s 272A(2)(c), dated 30.12.2014, we find that the assessee in reply to the notice u/s 133(6), dated 19.12.2013, had declined the ownership of any bank account with HSBC, Geneva, and thus for the said specific reason had refused to sign the consent waiver form. Accordingly, the non- signing of the consent waiver form by the assessee was specifically backed by a reason given by the assessee, which in our considered view cannot be construed as a non-compliance of the notice issued under Sec.133(6) - In fact, there is nothing discernible from the records which could persuade us to conclude that any specific information/details as were called for by the A.O by his notice issued under Sec. 133(6), had not been furnished by the assessee. Be that as it may, we find that involving identical facts penalty u/s 272A(2)(c) was also imposed in the case of the father of the assessee viz. Shri Kanaiyalal B. Shah, which however was thereafter vacated by a coordinate bench of the Tribunal We are unable to persuade ourselves to subscribe to the imposition/sustaining of the penalty under Sec. 272A(2)(c) by the lower authorities. In the backdrop of our aforesaid observations, we are of the considered view that the penalty imposed by the Jt. CIT under Sec. 272A(2)(c) is not justified - Decided in favour of assessee.

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• 2019 (12) TMI 610
  TDS u/s 194H or 194J - Short deduction of TDS - commission payment - HELD THAT:- Assessee has filed complete details before the Ld.CIT(A), including agreement between the parties, as per which the modus operandi of the assesses to sale of goods has been explained, as per which the assessee sales goods to stockiest and raises invoices and collets applicable excise duty and VAT. Further, the title in the goods is transferred to the stockiest, at the time of delivery. Arrangements between the assessee and the stockiest for sale of goods is in the nature of principal to principal basis, but not in the nature of principal to agent and accordingly, amount paid by the assesee to stockists is not in the nature of commission, which is liable for TDS u/s 194H. CIT(A) after considering relevant submissions of the assesee has rightly deleted additions made by the AO toward short deduction of TDS u/s 201(1) and consequent interest u/s 201(1A) . We do not find any error in findings of the Ld.CIT (A) and hence, we are inclined to uphold the findings of Ld.CIT(A) and dismissed appeal filed by the revenue.

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• 2019 (12) TMI 609
  Deemed dividend u/s 2(22)(e) - CIT-A deleted the addition - HELD THAT:- CIT-A has allowed the appeal of the assessee and deleted the addition in dispute by holding that the amount cannot be taxed as deemed dividend u/s. 2(22)(e) in the hands of the assessee company who was not the share holder of the lender company. CIT(A) further observed that in the assessment year 2010-11 the deemed dividend in dispute was received by the assessee company from M/s Puran Associates Pvt. Ltd. would be taxed in the hands of Sh. Ashok Chand Burman and Mrs. Minnie Burman who are shareholders holding substantial interest in M/s Puran Associates Pvt. Ltd. who holds a substantial interest in the assessee company and are the share holders in both the companies. CIT(A) has rightly directed the Assessing Officer to take necessary action to tax the amount in dispute in the hands of Sh. Ashok Chand Burman and Mrs. Minnie Burman. No interference is called for in the well reasoned order dated 27.05.2015 passed by the Ld. First Appellate Authority, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.

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• 2019 (12) TMI 608
  Reopening of assessment u/s 147 - notice u/s.148 issued after four years from the end of the relevant Assessment Year - HELD THAT:- AO has not recorded any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year. Therefore, the assessee clearly makes out the case. Since the essential condition for reopening the assessment u/s.147 is absent, the reassessment made u/s.147 w.r.s143(3) dated 30.03.2016 is not valid and hence the re-assessment order is quashed and the cross objection filed by the assessee is allowed. Since we have quashed the reassessment order passed u/s.143(3) r.w.s147, the appeal filed by the Revenue has become infructuous and hence dismissed.

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• 2019 (12) TMI 607
  TP Adjustment - comparable selection - HELD THAT:- Assessee is engaged in providing software development services to its Associated Enterprises (AE) i.e. Sybase Inc. and also engaged in carrying out the distribution of Sybase Inc. products in India thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2019 (12) TMI 605
  Penalty u/s 271(1)(c) - Non specify the particular charge of concealment or furnishing inaccurate particulars of such income - HELD THAT:- From the perusal of the notice issued u/s 274 r.w.s. 271 of the Income Tax Act, 1961, it can be seen that the notice did not specify which limb of section 271(1)(c) has been taken into account while passing penalty order. In fact, the Assessing Officer proceeded on the basis of concealment of income to the extent of Rs. 63,33,260/- which was confirmed by the appellate authorities i.e. by the CIT(A) as well as by the Tribunal in quantum appeal. Overall addition of Rs. 1,58,92,460/- has not been taken into account as a concealment by the Revenue authorities. The concealment cannot be in part when the addition was made in totality without any specific limb mentioned in Section 271(1)(c) which is now deleted in part by the appellate authorities. Therefore, this issue is debatable issue. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] will be applicable in the present case - thus in the present case which limb of Section 271(1)(c) has been invoked by the revenue authorities is not clear penalty cannot be imposed - Decided in favour of assessee.

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• 2019 (12) TMI 602
  Deduction u/s 80IC - allocation of the cartage expenses and diesel and oil expenses among two units - determination of the eligible profit - HELD THAT:- CIT-A has considered all the aspects of the computation of the eligible income for deduction u/s 80IC of the act. The learned CIT A has given the detailed reason with respect to the allocation of the cartage expenses and diesel and oil expenses towards the Badddi unit from the Noida unit. He also considered the allocation of the depreciation of the corporate office as common cost. He further examined the claim of the assessee with respect to the allocation of the manufacturing expenses between the 2 units with respect to the transfer of goods which resulted into reduction of the profits of the eligible unit. As Such he has considered all the arguments of the assessee with respect to the determination of the eligible profit. Thus, we do not find any infirmity with respect to any of the issues raised by assessee in the grounds of appeal. In view of the detail finding of the learned CIT A, we do not find any infirmity in the order. Accordingly all the grounds of appeal are dismissed.

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• 2019 (12) TMI 601
  Non deduction of TDS on such lease rental payment and interest to the Noida Authority - assessee-in-default - demand was raised under section 201(1) and interest under section 201(1A) - HELD THAT:- In the case of Rajesh projects (India) (P) Ltd [2017 (2) TMI 1109 - DELHI HIGH COURT] has directed not to take any coercive method for recovery of the amount or penalty once the basic liability (with interest to be paid by the GNOIDA) is satisfied. It is clear that if the tax on the under dispute lease rental income along with the interest has been paid by the deductee, i.e., GNOIDA, no recovery can be made from the deductor. In the light of the ratio of the decision, in the instant case, the NOIDA authority is required to pay tax as well as interest if any corresponding to the lease rental paid the assessee. However, if such tax and interest are not paid by the NOIDA, the assessee cannot be exonerated from the liability under section 201(1) and 201(1A). We find that in the instant case, CIT(A) has deleted liability under section 201(1) of the Act but retained the interest liability under section 201(1A) of the Act. The first appellate authority in assessment year 2011- 12, has deleted the interest liability as held that Noida Authorities are under an obligation to comply with the provision of the law relating to TDS and also for making all related payments. In our opinion, if the interest has already been paid by the NOIDA Authority on the lease rental income corresponding to payment of the assessee no liability can be raised on the assessee u/s 201(1A) of the Act. This is a matter of verification and cannot be presumed. We feel it appropriate to restore this issue to the file of the AO for verifying the facts of interest paid on the tax liability by the Noida Authority, corresponding to lease rental paid by the assessee, and decide the issue in accordance with law. Grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2019 (12) TMI 600
  Gain arising out of the sale of land - Assessee with an opening stock during the year under assessment purchased land for an integrated project - HELD THAT:- When assessee has categorically relied upon Board Resolution of the company to prove the fact that both the project at Gurgaon and Jaipur were integrated projects which certainly gets corroboration from the audited accounts, summarily dismissing the claim of assessee is certainly violation of rules of natural justice. CIT (A) has not deliberated in any manner as to what would be the outcome of Board Resolutions relied upon by the assessee when examined in the light of the audited accounts. All these Board Resolutions are available and audited financials are available - CIT (A) was required to get the Board Resolutions examined in the light of the audited financials and the other circumstantial evidence during appellate proceedings but he has dismissed this argument of the assessee by merely recording the findings that no third party evidence has been brought on record by the assessee. All these facts go to prove that the issue is required to be examined afresh by the AO in the light of the Board Resolutions and audited financials of the company and the evidence available on record by providing adequate opportunity of being heard to the assessee. Consequently, impugned order passed by the ld. CIT (A) is set aside and the file is remanded back to the AO to decide afresh after providing adequate opportunity of being heard to the assessee.

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• 2019 (12) TMI 599
  Disallowance of cost of construction cost of improvement of property while computing the Long Term Capital Gain - No documentary evidences in support of the construction work of boundary wall - HELD THAT:- The assessee has not produced any documentary evidences in support of the construction work of boundary wall except the receipts issued by these persons namely Shri Sharwan Lal Saini, Shri Arjun Lal Kumawat and Shri Sita Ram Verma, as well as affidavit of these persons. However, if the boundary wall which is a matter of fact and existence is found existed on the plot of land then the claim of the assessee cannot be rejected in toto. Only dispute between the assessee and AO is with regard to correct cost of construction of boundary wall. AO has not conducted any enquiry to contradict the claim of boundary wall on the plot of land. AO has denied the claim of cost of construction but has not denied that boundary is constructed. Therefore, once the existence of the assessee s boundary wall is not denied by conducting any enquiry or verification of the fact by the AO then the claim of cost of construction made by the assessee cannot be denied in toto. The assessee has claimed the cost of construction at Rs. 3.83 lacs and filed the receipts as well as affidavits of three persons to whom payment was made for the work of cost of construction of boundary wall. Though the AO could not examine these persons for want of service of notice yet the cost of construction of boundary wall could have been otherwise estimated by the AO through expert being DVO. In the absence of carrying out such an exercise of ascertaining the correct cost of construction on the part of the AO, the evidences produced by the assessee cannot be rejected. Accordingly, in the facts and circumstances of the case, the claim of cost of construction of boundary wall deserves to be allowed. It is clarified that since it is a case of construction of boundary wall, therefore, the non-mentioning of the same in the sale deed will not ipso fact lead to the conclusion that boundary wall was not in existence on the plot of land. Thus the appeal of the assessee is partly allowed.

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• 2019 (12) TMI 598
  Disallowance of interest u/s 36(1)(iii) - excessive interest - AO allowed interst @14.75% against the claim @15% and 16% - addition by further invoking the provisions of section 40A(2)(a) - HELD THAT:- Unsecured loans were without any security and were continuing for the past more than 2-3 years and during the year there was no change of rate of interest, it was further submitted that the rate of interest was commensurate with the risk, need for funds, non-availability of bank loan, etc. It was also submitted that the bank loans were just one of the various options available to raise funds but taking loan from bank involves various factors such as lengthy application process, long list of pre-requisites to qualify for the loan and also involve collateral security whereas all the factors were not involved in the case of unsecured loans. CIT (Appeals) has ignored this submission of the assessee. Commissioner of Income-tax (Appeals), though noted the above submissions in his order but confirmed the addition by further invoking the provisions of section 40A(2)(a) of the Act. The action of the learned Commissioner of Income- tax (Appeals) is not as per law therefore, we allow ground No. 2 of the appeal Ad hoc disallowance - Expenditure incurred in cash - HELD THAT:- AO has made the disallowance simply by holding that a perusal of bills and vouchers reveals that most of these expenses were incurred in cash and hence has disallowed 10 per cent. out of various expenses. AO has nowhere pointed out any specific discrepancy in the books of account nor has he rejected the same. In our opinion, the Assessing Officer cannot make ad hoc disallowance specifically in view of the case law relied on by the learned authorised representative. See ASHOK SURANA VERSUS COMMISSIONER OF INCOME-TAX [ 2016 (6) TMI 696 - CALCUTTA HIGH COURT]

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• 2019 (12) TMI 597
  Revised return u/s 139(5) rejected - Revision in the sales figure - act of AO in proceeding to frame the assessment on the basis of the original return of income - The submissions of the assessee were not found acceptable to the AO. AO was of the view that assessee could not justify the revised return by adopting revised sales. - HELD THAT:- High Court in the case of CIT Vs. Arun Textile [ 1991 (6) TMI 66 - GUJARAT HIGH COURT] has held that once the revised return is filed u/s 139(5) of the Act, the original return is substituted by the revised return and it is not open to the AO to advert to the original return of income or the statement filed along with it. Hon ble Punjab and Haryana High Court in the case of Beco Engineering Co., Ltd., Vs. CIT [ 1984 (2) TMI 83 - PUNJAB AND HARYANA HIGH COURT] has held that in a case assessee files the revised return then it is to be taken into consideration for the purpose of making an assessment and the original return cannot be adverted. once the revised return has been filed by the assessee u/s 139(5) of the Act and the same has been accepted, then it is not open to the authorities to take into consideration the original return of income for determining the total income in the assessment proceedings. Set aside the order of AO and direct the AO to consider the total income declared by the assessee u/s 139(5) of the Act for determining the total income. Thus, the grounds of the assessee are allowed.

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• 2019 (12) TMI 596
  Disallowance u/s 40A(3) - payments in cash as specified in Rule 6DD - HELD THAT:- Nature of expenditure incurred by the assessee under the car hire charges, which is disallowed by the Assessing Officer u/s 40A(3) and sustained by the CIT(Appeals) to the extent of Rs. 1,03,500/- is such that the same is covered by the proviso to section 40A(3) being payment made for plying, hiring or leasing goods carriages and since the payments of such expenditure was made by the assessee in cash not exceeding a sum of Rs. 35,000/-, the disallowance confirmed by the ld. CIT(Appeals) is not sustainable. Delete the said disallowance sustained by the CIT(Appeals) to the extent and allow Ground No. 1 of the assessee s appeal. Disallowance of electricity, power and fuel - as contended that the actual nature of the expenditure is to be seen keeping in view the underlying purpose of incurring such expenditure and not the treatment given in the books of account while booking the said expenditure - HELD THAT:- We are unable to accept this contention of the ld. Counsel for the assessee. The relevant proviso to section 40A(3) is applicable only in the case of payment made for plying, hiring or leasing goods carriages and the benefit of the same, in my opinion, cannot be extended to cover the expenditure incurred on power and fuel irrespective of the nature of such expenditure or the nature of the assessee s business. Therefore, find no merit in Ground No. 2 raised by the assessee in this appeal and dismiss the same. Addition u/s 40A(3) - HELD THAT:- What is relevant for the purpose of applicability of section 40A(3) is a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a Bank or account payee Bank Draft against any expenditure incurred by the assessee exceeding the specified limit of Rs. 20,000/- as applicable to the year under consideration. In the present case, such payments in cash were made by the assessee in respect of certain expenditure incurred as enumerated by the CIT(Appeals) in his impugned order exceeding the specified limit of Rs. 20,000/- and since the disallowance made by the AO u/s 40A(3) only to the extent of such payment/payments was sustained by the CIT(Appeals), I find no infirmity in the same calling for any interference. - Decided against assessee.

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• 2019 (12) TMI 595
  Deduction u/s 54F denied - investment made by the assessee in construction of new house - AO has allowed the deduction for which the assessee purchased the residential plot but denied the claim of deduction towards the cost of construction of new house on the ground that the assessee has not produced any supporting evidence to show that the house was completed within the stipulated period provided under section 54F - HELD THAT:- Though the assessee has not filed any valuation report, however, the assessee produced the bank account statement showing the withdrawal of money from time to time as well as various bills and vouchers towards purchase of construction material. All these evidences go to prove that the expenditure was incurred by the assessee within the stipulated period as provided under section 54F of the Income-tax Act. Further, the Assessing Officer has not disputed the fact that the house was finally constructed by the assessee by incurring the cost of construction. There may be a dispute of correct cost of construction but it cannot be denied that the assessee has not constructed the residen- tial house after sale of the existing asset. Thus the rejection of the claim of the assessee without conducting any enquiry to verify the fact about the actual cost of construction as well as the time period of the construction of the house is not warranted and justified. Hence, once the assessee has produced the evidence in support of his claim of construction of new residential house and house was actually constructed as existed at the plot of land, then the claim of the assessee cannot be denied on mere suspicion or doubt. Hence the claim of the assessee under section 54F is allowed. - Decided in favour of assessee.

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• 2019 (12) TMI 594
  Assessment u/s.153C - Addition based on seized material - connection or corroboration between the seized Materials / documents - HELD THAT:- Undisputedly, seized documents do not belong to the assessee and no incriminating documents/materials have been seized from other persons, which are being assessed u/s.153C r.w.s. 143(3), then no sustainable addition can be made in the hands of other persons in such assessment year. Our view also gets a strong support from the decision of Hon ble Supreme Court in the case of Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] vehemently relied by ld Sr. counsel for the assessee. Therefore, we have no hesitation to hold that the addition made by the AO and confirmed by the CIT(A) have no legs to stand on the premises of relevant legal provisions of section 153C of the Act and thus, same are not sustainable and, hence, we hold so.

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• 2019 (12) TMI 593
  Bogus purchases - AO has made addition towards 12.50% profit on alleged bogus purchases, on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - CIT(A) has scaled down addition to 8.80% profit on total alleged bogus purchase - HELD THAT:- In this case, the assessee is in the business of manufacturing and trading in playwood and other wood products. The assessee had declared 3.70% gross profit in regular books of accounts including on alleged bogus purchases. Further, the assessee claims that the ITAT, Mumbai Bench in case of Vaishali Prakash Muni vs. ITO [ 2018 (4) TMI 1202 - ITAT MUMBAI] had considerd an identical issue and considering facts has directed the AO to estimate 2% profit on alleged bogus purchases. The assessee further claims that fact of its case is identical to facts of case considered by the Tribunal in case of Vaishali Prakash Muni vs. ITO(Supra) and hence requested to estimate 2% profit on alleged bogus purchases. We, therefore, considering facts and circumstances of this case and consistent with view taken by the Coordinate Bench in number of cases, including in the case of Vaishali Prakash Muni vs. ITO (Supra) direct the Ld.AO to estimate 2% profit on alleged bogus purchases. Accordingly, we direct the AO to reduce additions to 2% profit on alleged bogus purchases. - Decided partly in favour of assessee.

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• 2019 (12) TMI 592
  Revised return - withdrawing the claim of TDS and reduction in corresponding professional income - credit for the TDS claim - as assessee is maintaining books of account on cash basis, though said to be deducted as tax at source by his client, since, it is not remitted to the Government account and not reflected in 26AS, it is clear that the assessee has not received the same - HELD THAT:- Since the assessee is accounting his professional (actor) income on cash basis, the entire receipt including TDS has to be assessed in the respective assessment year. Therefore, the addition made in assessment year 2009-10 and 2014-15 are in accordance with law. However, since the assessee is claiming that the producers by name Silver Screen Movies and M/s. Maragadam Pictures have deducted the tax from the respective receipts, while determining the tax payable by the assessee, the AO is directed not to call upon the assessee to pay the corresponding taxes himself to the extent on which the tax has been deducted from the income of the respective assessment year, in accordance with Section 205 of the Income Tax Act, provided, that the assessee is able to furnish the TDS certificate issued by the respective deductor, supra, to that extent. Carry forward and set-off of unabsorbed depreciation against income from other sources and income from house property in the revised return of income / revised working of the statement of income - It is seen that the ld.CIT(A) has not taken cognizance of the fact that the assessee has admitted income from business and profession at Rs. 38,32,052/-. Therefore, the assessee is entitled to set-off the brought forward loss against such income. The AO shall verify the fact of income admitted from business and profession, as indicated above, and if it is the fact, then he shall allow the brought forward depreciation claim to the extent of availability of income under that head. To this extent, the assessee s appeal is allowed.

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• 2019 (12) TMI 591
  Revision u/s 263 - Addition u/s 40(a)(ia) - amount paid or payable during year - HELD THAT:- In the present case, the assessee is covered by jurisdiction of Hon ble Allahabad High Court and in the case of Vector Shipping Services Hon ble Allahabad High Court [ 2013 (9) TMI 1073 - ALLAHABAD HIGH COURT] had held that tax is required to be deducted only on the amounts payable and assessee is not required to deduct tax on the amounts paid during the year. In the present case, the assessee had credited the interest amount to the credit of the parties and to examine as to whether such credit to the account of a party amounts to payment or not, the definition of word paid as per section 43(2) has to be analyzed. Definition of amount paid, clearly demonstrates that in case the assessee is following the mercantile system of accounting, which system records revenues and expenses when they are incurred, regardless of when cash is exchanged, therefore, the amount credited to the payee account will also amount to payment. Since the assessee was following the mercantile system of accounting, the entries of interest credited by him to the payees accounts were entries of accrual in the absence of cash transactions, which amounted to payment and, therefore, the Assessing Officer had rightly not made the disallowance as per the judgment of the jurisdictional Hon ble Allahabad High Court and as per the Board Circular, which was binding on him. In view of the above, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue, as the AO had rightly not made the disallowance. In view of the above, the appeal of the assessee is allowed and the order passed by learned CIT u/s 263 is quashed. - Decided in favour of assessee.

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• 2019 (12) TMI 589
  Disallowance of the interest u/s 36(1)(iii) - investment made on Capital Work in Progress (CWIP) - HELD THAT:- A perusal of the balance sheet of the assessee reveals that the assessee during the year had taken unsecured loans / interest bearing loan of Rs. 84170175.58 from the banks. The loan and advances made by the assessee at the end of the year were of Rs. 85591716.58. The own capital of the assessee is not sufficient either to meet the loan and advances or to meet the capital work in progress. It is admit ted case of the assessee that the term loan was used for acquisition of the capital assets. Assessing Officer rightly calculated the proportional disallowance of the amount of CWIP. There is no justification to distribute the entire term loan amount over the total assets. Addition u/s 68 - unexplained cash credits - HELD THAT:- Assessee apart from filing the confirmation from the investor company has also produced on file the Income-tax returns and PAN numbers of the investor and statement of the financials of the Investor to prove the identity and financial capacity of the Investor. To prove the genuineness of the transactions, the assessee also filed conformation from the Investor regarding the investment made by it in the assessee company. During the appellate proceedings before the CIT(A), the assessee also furnished bank statement of M/s Reliable Realtech P Ltd. depicting that the funds were paid by the said company out of its available business limit . The assessee also proved from the financials of the investor that it was possessed of sufficient funds to make investment in the assessee company. Assessee also placed on file the bank statement of the assessee to show that the payments were repaid to the Investor in the next year. In our view, the aforesaid documents were sufficient to prove the identity, financial capacity as well as the genuineness of the transactions. CIT(A) has confirmed the addition on just assumption and presumption basis without pointing out any suspicious circumstance or rebuttal to the evidence furnished by the assessee - Decided in favour of assessee.

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• Customs

• 2019 (12) TMI 615
  Claim of refund - Benefit of N/N. 515/86-Cus., dated 30.12.1986 - Requirement of issuance of Essentiality certificates issued by the Oil Industry Development Board - benefit of notification denied on the ground that the appellant could not able to produce those certificates - HELD THAT:- It is an admitted fact on record that at the time of filling the Bills of Entry for assessment, the appellant did not submit the requisite certificates issued by the competent authorities before the assessing authority and accordingly, the duty liability on merit was assessed, without extending the benefit provided under Notification No. 515/86 Cus., dated 30.12.1986. The said certificates were subsequently obtained by the appellant and submitted before the customs authorities along with the refund applications. In this case, the assessment made in the Bills of Entries was not appealed against by the appellant and also the said assessment had not been modified or altered by the assessing authority. In dealing with the situation of filing of refund application, without challenging the assessment order, the Larger Bench of Hon ble Apex Court in a recent judgment in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] have ruled that the scope of the provisions of refund under Section 27 ibid cannot be enlarged and the same has to be read with the provisions of Section 17, 18, 28 and 128 ibid. It has further been ruled that the provisions under Section 27 ibid cannot be invoked in the absence of amendment or modification having been made in the Bill of Entry, on the basis of which assessment has been made. In absence of challenge of the assessment order, refund application cannot be filed or entertained by the authorities - the rejection of the appeal filed by the appellant is in conformity with the statutory provisions - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2019 (12) TMI 625
  Winding up petition - section 433(e) of the Companies Act, 1956 - Does this Court retain jurisdiction to hear the winding up petition being CP 1 of 2016 and the connected applications thereto? If so, what are the provisions of law applicable to adjudicate the said petition? - HELD THAT:- The Company Judge of this Court retains the jurisdiction to try the aforesaid winding up petition falling in the category of saved petition, even if an insolvency proceeding is initiated against the same company before the NCLT under the provisions of IBC by another creditor, like Devi Trading. The applicable law for the said petition to try out by the Company Court will be the Act of 1956 and Rules of 1959. Should the Provisional Liquidator be released/discharged and directed to make over possession of the properties and assets, books of accounts of the said Company in his possession to the IRP appointed by NCLT? - Should further hearing of the winding up petition (C.P 1 of 2016) along with all connected applications be stayed? - Should the winding up petition along with all connected applications be transferred to NCLT to be further heard by it? Does NCLT have the jurisdiction to hear out the petitions filed by the intending purchasers? - HELD THAT:- The applications filed by the intending purchasers of the flats / units developed by the said company cannot be decided by the NCLT, it requires declaratory orders to be passed with regard to civil rights of the parties as also direction for execution of conveyance and making over possession. The NCLT does not possess the jurisdiction under IBC for passing of such orders. The IRP, however, will be free to approach the Provisional Liquidator and take inspection and obtain copies of the documents and information as required by it for preparing the resolution plan to be submitted before the NCLT. The Provisional Liquidator under no circumstances shall make over the originals of the book and the possession of the assets of the said Company to the IRP. If the IRP has to inspect any asset of the said Company for the preparation of the Resolution Plan he should approach the Provisional Liquidator who will render necessary assistance and cooperation. Are the provisions of IBC applicable to the instant winding up petition when the same has been filed on 4th January, 2016 i.e. much prior to IBC coming into operation? - HELD THAT:- In view of the provisions of a winding up petition which is a saved petition being transferred to NCLT for being heard before it like a petition under Section 9 of the IBC, it cannot be said that the provisions of IBC has not been made applicable to the saved petitions like the said petition, even if, the same has been filed prior to IBC coming into force. Whether the order dated 13th March, 2019 could have been obtained from NCLT without first obtaining leave of this Court under the provisions of section 446 of the Act of 1956? - Is the order of NCLT dated 13th March, 2019 in the absence of leave under section 446 of the Act, 1956 or is otherwise an order without jurisdiction and a nullity? - HELD THAT:- The NCLT was well within its competence to entertain such application despite prior leave under the provisions of Section 446 of the Act of 1956 having not been obtained. The NCLT, however, should have been cautious before passing the order dated 13th March, 2019 at the instance of a creditor (Devi Trading) when the fact that the Provisional Liquidator had been appointed in a saved petition by the Company Judge was brought to its notice particularly when the application appears to have been moved about an year after filing. The NCLT should have also considered the effect of a winding up petition being advertised after having been admitted which assumes a representative character when all creditor like Devi Trading become obliged to join in the winding up proceedings pending before this Court to either support or oppose the winding up order. NCLT while exercising its jurisdiction under IBC ought to have been more cautious while passing orders directing the Provisional Liquidator to hand over the books, documents and assets of the company knowing that the Provisional Liquidator was appointed by the Company Judge of this Court in a saved petition and further on being informed that the Company Judge is considering an application of the IRP for discharge of the Provisional Liquidator. Propriety also demanded that NCLT should not have passed mandatory directions on the Provisional Liquidator to hand over the books, documents and assets to the IRP or directed personal presence of the Provisional Liquidator while hearing an application under Section 7 of the IBC when it knew that the Provisional Liquidator has been appointed by the Company Judge of this Court in a saved petition. This Court possesses the jurisdiction to hear out the winding up petition being CP 1 of 2016 along with all connected applications. However, the winding up petition and the connected applications thereto should not be proceeded with till NCLT comes to the conclusion as to whether the resolution plan in respect of the said company is either approved or rejected - Application disposed off.

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• Service Tax

• 2019 (12) TMI 621
  Extended period of limitation - CENVAT Credit - trading/exempt activity - common input services used for manufactured and exempt goods - non-maintenance of separate records - Rule 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT:- As found from the show-cause notice and even in the Order-in-Original there was no Service Tax liability shown in the table that pertains to financial year 2009-10, 2010-11, 2011-12, 2012-13 and the only Service Tax liability due against the appellant for the financial year 2008-09 against which last ST-3 return was filed on 22.04.2009. Show-cause notice been issued on 22.04.2009 is, therefore, barred by the period of limitation since issued one day after the stipulated period of 5 years is over which extended period can only be invocable under certain contingency primarily when appellant-assessee intended to evade payment of tax there was no intention shown in the documents available on record for the period 2012-13 2011-12 since Service Tax liability against appellant was shown as zero in the audit report for that period. It is not understood as to under what authority the Excise Officials had travelled beyond the period of 18 months to find out, if any Service Tax was due when they found no evidence of fraud, collusion, wilful misstatement, suppression of fact or contravention of the provision of the Finance Act or Rule within the statutorily prescribed 18 months - the respondent-department can travel only backward from the current assessment to the past period and not like the audit people who usually move forward from the year last audit was closed up to the current assessment/ financial year. Be that as it may, show-cause notice issued after expiry of 5 years would be barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 590
  CENVAT Credit - appellant providing Supply of Tangible goods services - capital goods - sale of capital goods - reversal of credit not made under Rule 3(5A)(a) of Cenvat Credit Rules - extended period of limitation - HELD THAT:- From Section 73 (3) of the Finance Act, 1994, it is very clear that the benefit of this provision will not be applicable when there is suppression , willful mis-statement, fraud, collusion etc. The appellant have relied upon various cases that suppression of facts etc. cannot be alleged in the cases amounts have been paid and show cause notice is issued subsequent to audit. Except mentioning in the show cause notice that there has been suppression of facts, no positive act committed by the appellant has been put forth by the revenue to allege suppression of facts in the impugned cases. The detection is subsequent to the audit and therefore going by the ratio of case laws cited by the appellant one cannot allege suppression of facts where show cause notice has been issued on the basis of audit objections - thus the provisions of section 73(3) of the Finance Act, 1994 are rightly attracted. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (12) TMI 620
  Clandestine removal - excess usage of raw material Sponge Iron, than mentioned - entire demand is based on the closing balances shown in the ER-1 and ER-6 return - The entire SCN is based on inconsistency and the department is taking two stands while calculating the duty on the said finished goods. The department is demanding duty on TMT Bars and Slag only whereas no demand in respect of runners and risers and M.S scrap was raised in the present SCN. HELD THAT:- The entire demand is based on the yield of production of M.S Ingot which is further used in the manufacturing of TMT Bars. The yield of production was in respect of only a particular month which was uniformly applied for entire demand of Central Excise Duty. At no point or stage, Department has able to prove that the appellant during the relevant period was having electricity connection to manufacture M.S Ingots and TMT Bars. It is an admitted fact that for the period the demand has been raised, the appellant did not have any power connection. Department has also failed to produce that there is any other alternate source of power to manufacture those goods. In such a situation, it is very clear that the entire demand is based on mere average yield of production and no concrete evidence to manufacture the alleged goods has been brought on the record by the department. The statement which has been relied upon by the department is only in respect of month of June 2013 which is uniformly applied for calculating the demand. It is a well settled principle of law that charges of clandestine removal cannot be based on series of assumptions and presumptions whereas should be based on evidences like unaccounted purchase of raw materials, receipt and consumption of raw materials, freight payment for movement of such raw material, dis-proportionate power consumption, capacity utilization and labor employed, unaccounted sales proceeds and substantial cash recovery from office or factory premises, and so on - In the present case, these clinching evidences are absolutely missing and therefore charges of clandestine removal cannot be held sustainable for demand of Rs. 2,86,17,242. Demand of Rs. 48,75,834/- which is based on the invoices issued by the appellant during the period 08.01.2014 to 10.01.2014 for a quantity of 1059.920 - HELD THAT:- The said demand is confirmed by the Ld. Commissioner merely on the ground that some of the vehicle number shown in the invoices are incapable of transporting the alleged goods. The said conclusion was drawn by the Ld. Commissioner only citing the few incidents, wherein number of cases no inquiries were made either from the transporters or from the recipients of the goods. Out of 27 transporters, statements of only 7 transporters were recorded by the officers and only 2 appeared for their cross-examination - In such a scenario, we are inclined to accept the contention of the appellant that in absence of the statements of the recipients of the goods and cross-examination of all the transporters whose statements were recorded, it cannot be concluded that no goods were cleared from the appellant s premises. In absence of sufficient evidences which are essential to prove the charges of clandestine manufacture and its removal from the factory of the appellant, the demand which are based on the invoices issued by the appellant during the period of 08.01.2014 to 10.01.2014 is also not maintainable and hence liable to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 616
  CENVAT Credit - stock transfer - shifting of input from one unit to another - the appellant shifted inputs and certain capital goods from Unit-II to Unit-I for manufacture of dutiable final products - revenue neutrality - extended period of limitation - HELD THAT:- Initially the appellant set up Unit-II for manufacture of Control Valves but subsequently, found that the space is inadequate and therefore, he set up another unit which is Unit-I adjacent to Unit-II and transferred some of the inputs and capital goods from Unit-II to Unit-I as per the advice given by the department. The appellant transferred the input and capital goods by raising invoice and debited duty in Unit-II and took credit of the same in Unit-I in terms of Rule 3(5) of the CCR. Both debit and credit entries made by both the units are reflected in the ER-1 returns and due intimation was given to the department by the appellant vide their letter dated 14.6.2010. Further, it is a case of simply stock transfer. Therefore, the restriction as provided in Rule 9(1)(b) of CCR is not applicable because the appellant has not availed credit on supplementary invoices. The appellant has paid the duty voluntarily in terms of Section 11A(2B) of the Central Excise Act on being pointed out by the Preventive Officers and took the credit of the same in Unit-I in terms of Rule 3 of the CCR. Extended period of limitation - HELD THAT:- All the facts from the beginning were in the knowledge of the department and specific intimation was also given by the appellant vide its letter dated 14.6.2010 and therefore, invoking extended period of limitation to confirm the demand is not tenable in law. Therefore, the entire demand is also barred by limitation as the period of dispute is from 1.8.2008 to 10.09.2008 but the show-cause notice was issued on 4.5.2011 by invoking extended period of limitation alleging suppression. The impugned order is not sustainable on merit as well as on limitation - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 614
  CENVAT Credit - input services - erection, commissioning and installation services - consultancy service - site supervision in connection with the setting up of integrated steel plant services - HELD THAT:- The appellant is engaged in the manufacture of sponge iron, MS billets and other iron and steel items falling under Chapter 72 of the CETA, 1985. Appellant is already having a plant for manufacture of sponge iron but they are setting up a integrated steel plant within the same premises and for that setting up, they have availed various input services provided by M/s. Mecon Ltd. who are engaged in consultancy for detailed engineering and erection, commissioning and installation. The impugned services for which CENVAT credit has been availed by the appellant do not fall in the exclusion clause as provided under Rule 2(l). Further, the services availed in the present case is relating to engineering, design, erection and commissioning, installation and not related to civil construction or not related to works contract service used for laying foundation for support of capital goods. Credit allowed - appeal allowed on merits, the question of limitation not considered - decided in favor of appellant.

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• 2019 (12) TMI 606
  CENVAT Credit - common input services used for manufacture of dutiable and exempted products - non-maintenance of separate records - case of the department is that since the common input service on which credit was availed was used in respect of trading turn over, appellant is required to pay 6% in terms of Rule 6(3) - HELD THAT:- Though the appellant had availed Cenvat Credit on common input service which is attributed to both dutiable manufacturing goods as well as the trading activity, but, after the adjudication of the Show Cause Notice the appellant have reversed Cenvat Credit along with the interest attributed to trading activity. With this fact the situation became as if no Cenvat Credit was taken right from the date of taking credit by the appellant. It is observed that though it is the appellants claim that the Cenvat Credit attributed to the trading activity along with interest has been paid and the copy of Cenvat account for the credit reversal as well as challan for the payment of interest has been enclosed. Considering this, the demand of 6% is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 604
  CENVAT Credit - common input services used in the manufacture of dutiable and exempted product - non-maintenance of separate records - Rule 6(3) of CCR - HELD THAT:- Though the appellant had availed Cenvat Credit on common input service which is attributed to both dutiable manufacturing goods as well as the trading activity, but, after the adjudication of the Show Cause Notice the appellant have reversed Cenvat Credit along with the interest attributed to trading activity. With this fact the situation became as if no Cenvat Credit was taken right from the date of taking credit by the appellant. This tribunal in various cases held that once the Cenvat Credit along with interest has been paid, no demand of 6% can be made. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 587
  Clandestine Removal - inputs - search and seizure in the factory premises - shortage of finished excisable goods - Computer printouts - third party documents - admissible evidence or not - Section 36B of Indian Evidence Act - time limitation - whether the search and seizure operation were made according to the provisions of Section 100 of the Cr.P.C. read with Section 18 of the Act or not? - HELD THAT:- The search and seizure proceedings are made in violation of Section 100 of Cr PC read with Section 18 of the Act, for the reason that department has failed to follow the provisions of Section 36-B of the Act. Also, at the time of sealing and desealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtained as per the provision of Section 36-B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellant was obtained by the department, the credibility of the computer printout gets vitiated. Hon ble Apex Court in case of ANVAR P.V VERSUS P.K. BASHEER AND OTHERS [ 2014 (9) TMI 1007 - SUPREME COURT] has held that the computer printout can be admitted as evidence only if the same are produced in accordance with the provisions of Section 65B(2) of the Evidence Act. A certificate is also required to accompany the computer printouts as prescribed under Section 65B(4) of Evidence Act, 1972. It has been clearly laid down in para 15 of this judgment that all the safeguards, as prescribed in Section 65B(2) (4), of the Act, is required to be met so as to ensure the source and authenticity, pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. The provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act, 1944 of the Act are parimateria. The shortage was detected on the basis of eye estimation and also on average weight without physical weighment. The department failed to gather any of documents from the factory of the appellant or elsewhere. Further, the loose documents which were recovered from the residence of Shri Ravi Bhushan Lal were not put to test for ascertaining to the authorship of these documents. Moreover, these documents could not be proved with the corroborative evidences. The investigating authority failed to elucidate the system adopted for the preparation of the relied upon documents which were allegedly based on these documents. The details contained on the loose sheets and third party documents are actually not comprehensible and, therefore, cannot be accepted as admissible piece of evidence. The charges of clandestine removal of the goods cannot be upheld merely on assumptions and presumptions, but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. - The shortage which was detected by the officers is based on average weight method basis and, therefore, mere admission by the directors, who deposited the duty for the shortage, is not enough to proof that the goods were clandestinely cleared from the appellant factory - thus, the shortage was detected on average basis is not sustainable. Penalty - HELD THAT:- There is no no material evidence was brought on record to prove the charges to attract penalty against them, except the statements which were relied upon by the department without following the mandate of Section 9-D of the Act - penalties set aside. A similar issue has come up for consideration of this Tribunal in case of BIHAR FOUNDARY CASTINGS LTD., M/S. GAUTAM FERRO ALLOYS VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, RANCHI [ 2019 (8) TMI 527 - CESTAT KOLKATA] . The Tribunal has held that in view of non-compliance of mandatory requirement of 36-B of the Act the case the clandestine removal cannot be made applicable merely based on the printouts taken from the laptop computer obtained during the search. And the appeals were allowed by setting aside the order passed by the Adjudicating Authority - The ratio of this case is applicable in toto in case at hand also thus the demand is not sustainable and liable to be set aside. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 623
  Imposition of tax - rejection of Form III-D s on technical grounds on technical grounds - Whether the tax imposed by rejecting the Form III-D s on technical grounds can be treated to be the tax admittedly payable by a dealer as defined in the Expla(nation appended to Sub-section 1) of Section 8 of the U.P. Trade Tax Act, for the purposes of computation of interest under the said sub-section? HELD THAT:- In view of the order passed by this Court today in the companion Trade Tax Revision of case M/S TATA MOTORS LIMITED LUCKNOW VERSUS COMMISSIONER, COMMERCIAL TAX U.P. LUCKNOW AND ANOTHER [ 2018 (4) TMI 1774 - ALLAHABAD HIGH COURT] the levy of interest will have to be reconsidered by the Tribunal and hence, the matter may be remanded back to the Tribunal for reconsideration of the matter afresh. In view of the facts and circumstances of the case and the order passed by this Court in companion Trade Tax Revision in TATA MOTORS, the matter is remanded to the Tribunal for reconsideration of the issues in accordance with law - Revision allowed.

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• 2019 (12) TMI 622
  License or permission to conduct business of Online Order processing and Delivery of Indian and Foreign Liquor including Beer, Wine and Low Alcoholic Beverages - cancellation of Letter of Authority without issuing SCN - Karnataka Excise Act, 1965. Whether the petitioner require any licence or permission to conduct business of online order processing and delivery of liquor to the consumer in the state of Karnataka? - Regulation of trade or business in liquor - HELD THAT:- The fundamental right to carry on the present business claimed by the petitioner on the premise i.e., sale of liquor is not res extra commercium and the right under Article 19 (1) (g) of Constitution exists is not absolute but subject to the State permitting to undertake the business. Business of liquor stands on a different footing from other trades, the State possesses the right of control over all aspects of intoxicants. Imposing fetters or restrictions by the State is mandatory though there is no prohibition policy in the State. In such circumstances, a right is vested with the State to monitor, regulate, and prevent from conducting the activities/trade in liquor. Any such restriction imposed on the petitioner to achieve the laudable object of the Act, 1965 cannot be termed as an infringement of fundamental right guaranteed under Article 19(1) (g) of the Constitution of India - the arguments of the learned senior counsel that Articles 14 and 19(1) (g) are infringed by the act of the State is untenable. Transaction of petitioner whether is sale of liquor - HELD THAT:- Ordinarily, the essential elements to constitute a sale are (i) parties competent to contract (ii) mutual consent, (iii) transfer of property in the goods from the seller to the buyer, and (iv) a price in money paid or promised. As per Section 4 Sale of Goods Act, 1930 where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called as sale - In the present set of facts, the petitioner is placing orders on the CL-2 licence holders to supply required quantity of liquor on payment basis and in turn sells the same to the person who is an end consumer by receiving the amount which is more than the MRP fixed by the CL-2 licence holder in the pretext of service charges. In terms of Act, 1965 any transfer otherwise than by way of gift being sale , the transaction of the petitioner certainly comes under the term sale , as such the provisions of the Act, 1965 are applicable. Transportation of liquor - HELD THAT:- The State has prescribed the permissible quantity in terms of Rule 21 of the Excise (Possession, Transport, Import and Export) Rules, 1967. The said rule does not provide for delivery/transport of liquor beyond the limits prescribed therein. It is the contention of the petitioner that it does not facilitate delivery/transport of liquor beyond the limits prescribed in Rule 21 of the Rules, 1967. Section 12 of the Act, 1965 provides for permits relating to transport - If the interpretation given by the petitioner to be accepted, in each and every case, where the quantity of liquor requires a permit to possess or transport can easily be divided into small quantities in order to escape the rigor of the Act, 1965 and the Rules which would defeat the purport and object of the Act, 1965. Possessing and transporting of liquor by the petitioner to various end customers is not saved under Rule 21 of the Rules, 1967. Revocation of loa - HELD THAT:- On trial and experimental basis, LOA was issued which was not in conformity with the provisions of the Act. On realizing the mistake, the same has been withdrawn at its own discretion in the interest of the stake holders and the public at large. Any LOA issued by the respondent without jurisdiction is non est in the eye of law. Source of power to issue LOA is not traceable to any of the provisions under the Act, 1965. Standard of morality - HELD THAT:- There are various types of licences one needs to have to store/manufacture/sell/possess/transport. Hence, it is illegal if any sale or purchase is made through any other mode than prescribed under the Act, 1965 in Karnataka. It is only the licence holders who are entitled to sell the liquor. There is prescribed timings permitted for sale of liquor but the petitioner may engage in 24x7 delivery through online. E-commerce trade with other goods can not be compared with the sale of liquor through online. Under the Act, 1965 and Rules, no online sale is permitted. As such, any transaction of liquor through online made by the petitioner in contravention of the provisions of the Act and Rules is illegal. Whether issuing a writ of mandamus to the respondent not to interfere with the petitioner s business relating to liquor is warranted in the circumstances of the case? - HELD THAT:- It is settled law that writ of mandamus cannot be granted unless the existing legal right of an applicant or an existing duty of the respondent has been established. The writ cannot be issued to create or establish a legal right, but to enforce that stood already established - The petitioner is neither a licensee under the provisions of the Act, 1965 to carry on trade in liquor nor has a legal right under the statute to enforce its performance. Unless the legal right is established, corresponding legal duty imposed under the statute cannot be invoked. No prohibition for liquor in the State would not mean absolute liberty to deal in liquor trade. The business model of the petitioner cannot be held that it does not require authorization under any of the provisions of the Act, 1965. The petitioner taking shelter under the PSS Act cannot give a go-bye to the provisions of the Act, 1965. Indeed, the Act, 1965 do not permit home delivery of alcohol either for oneself or as an agent of another. Hence, no writ of mandamus can be issued as prayed. The petitioner is not entitled to carry on business of online order processing and delivery of liquor to the consumers in the State of Karnataka in the absence of enabling provision available under the Karnataka Excise Act, 1965 to grant such licence or permission. Petition dismissed - both the questions framed are answered against the petitioner.

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• Wealth tax

• 2019 (12) TMI 603
  Wealth tax assessment - notice has not been issued within the time limit prescribed as per the act - HELD THAT:- Provisions of section 42 of the act saves only validly issued notices within the time limit, if, not served upon the assessee, not served upon him in time and served upon him in an improper manner, if not objected before WTO. Notice itself has been issued beyond the time prescribed u/s 16(2) of the Wealth Tax Act. Thus, according to us the provision of section 42 does not apply to a situation where the notice has not been issued within the time limit prescribed as per the act. The ld CWT (A) has erred in invoking of provisions of section 42 of the WT Act to such notice, which has been issued beyond the time limit prescribed u/s 16(2) of the WT Act. Accordingly, we hold that as the ld Wealth Tax Officer has failed to issue the notice u/s 16(2) on or before 30.08.2012 but issued on 13.09.2012, is invalid and consequently wealth tax assessment order passed on the assessee cannot be sustained, hence, quashed. Accordingly, ground No. 1 of the appeal of the assessee is allowed.

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• Indian Laws

• 2019 (12) TMI 626
  Maintainability of appeals under Section 37 of the Arbitration and Conciliation Act, 1996 - territorial jurisdiction - HELD THAT:- Admittedly, on the facts of these cases, there was no adjudication under Section 34 of the Arbitration Act, 1996 - all that was done was that the Special Commercial Court at Gurugram allowed an application filed under Section 151 read with Order VII Rule 10 CPC, determining that the Special Commercial Court at Gurugram had no jurisdiction to proceed further with the Section 34 application, and therefore, such application would have to be returned to the competent court situate at New Delhi. Determination of the seat of the arbitral proceedings between the parties - HELD THAT:- The new provisions contained in Sections 20 and 31(4) of the Arbitration Act, 1996 are a replication of Articles 20 and 31(3) of the UNCITRAL Model Law, in which pride of place is given to the juridical seat of the arbitral proceedings. However, the definition of court in Section 2(1)(e) of the Arbitration Act, 1996 continues the definition contained in the Arbitration Act, 1940, but replaces any and every civil court by only the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction. Section 42 of the Arbitration Act, 1996 also substantially follows the drill of Section 31(4) of the Arbitration Act, 1940 - given the new concept of juridical seat of the arbitral proceedings, and the importance given by the Arbitration Act, 1996 to this seat , the arbitral award is now not only to state its date, but also the place of arbitration as determined in accordance with Section 20. However, the definition of Court contained in Section 2(1)(c) of the Arbitration Act, 1940, continued as such in the Arbitration Act, 1996, though narrowed to mean only principal civil court and the High Court in exercise of their original ordinary civil jurisdiction. Thus, the concept of juridical seat of the arbitral proceedings and its relationship to the jurisdiction of courts which are then to look into matters relating to the arbitral proceedings - including challenges to arbitral awards - was unclear, and had to be developed in accordance with international practice on a case by case basis by this Court. Whenever there is the designation of a place of arbitration in an arbitration clause as being the venue of the arbitration proceedings, the expression arbitration proceedings would make it clear that the venue is really the seat of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as tribunals are to meet or have witnesses, experts or the parties where only hearings are to take place in the venue , which may lead to the conclusion, other things being equal, that the venue so stated is not the seat of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings shall be held at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. It is clear that the reasoning followed stems from the subject-matter test that flows from the definition of court in Section 2(1)(e)(i) of the Act. According to the impugned judgment, since the agreement was executed at Faridabad, part of the cause of action would arise at Faridabad, clothing Faridabad courts with jurisdiction for the purposes of filing a Section 34 petition. The second part of the reasoning is that Faridabad is the place where the request for reference to arbitration was received, as a result of which part of the cause of action arose in Faridabad, which ousts the jurisdiction of Courts of New Delhi, in which no part of the cause of action arose. The Section 34 petition is ordered to be presented in the Courts in New Delhi, as was held by the learned Single Judge of the Special Commercial Court at Gurugram - Appeal allowed.

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