TMI Tax Updates - e-Newsletter
December 17, 2020

Case Laws in this Newsletter:

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

Articles

1. GIFTS RECEIVED BY THE ASSESSEE FROM HIS PARENTS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Auto population of details in Form GSTR-3B from Form GSTR 1 & GSTR 2B

2. Webinar for taxpayers on QRMP Scheme

3. Income Tax Department conducts searches in Chandigarh

4. National Strategy on Financial Education 2020-25

5. Government of India and NDB sign agreement for $1,000 million to provide support to Aatma Nirbhar Bharat Abhiyan through MGNREG Scheme to support India’s economic recovery from COVID-19

6. Cabinet approves assistance of about ₹ 3,500 crore for sugarcane farmers (Ganna Kisan)

7. Deadline for States to implement citizen centric reforms extended till 15th February 2021

8. INDIA’S FOREIGN TRADE: November 2020

Notifications

Customs

1. 47/2020 - dated 15-12-2020 - ADD

Seeks to amend notification No. 12/2018-Customs (ADD) dated 20th March, 2018 imposing anti-dumping duty on imports of Dimethylacetamide originated in or exported from China PR and Turkey, to exclude goods of certain specification from the product under consideration

GST - States

2. G.O.Ms.No.371 - dated 15-12-2020 - Andhra Pradesh SGST

Prescribing the Due Date For Furnishing Form GSTR-1 For the Quarters October, 2020 To December, 2020 And January, 2021 To March, 2021 For Registered Persons Having Aggregate Turnover of Upto 1.5 Crore Rupees in the Preceding Financial Year or the Current Financial Year

3. CCST Ref. No.CCW/GST/74/2015 - dated 4-11-2020 - Andhra Pradesh SGST

NOTIFICATION OF THE NUMBER OF HSN DIGITS REQUIRED TO BE MENTIONED ON TAX INVOICE

4. 103/GST-2 - dated 15-12-2020 - Haryana SGST

Notification to waive penalty payable for noncompliance of the provisions of notification No.18/GST-2, dated the 31st March, 2020 under the HGST Act, 2017

5. 102/GST-2 - dated 15-12-2020 - Haryana SGST

Notification to rescind Notification no.92/GST-2, dated 28th October, 2020 under the HGST Act, 2017

6. 101/GST-2 - dated 15-12-2020 - Haryana SGST

Notification to extend the due date for FORM GSTR-1 under the HGST Act, 2017

7. ERTS (T) 65/2017/Pt.II/197 - dated 13-11-2020 - Meghalaya SGST

Corrigendum - Notification ERTS Department, No. 82/2020-State Tax, dated the 10th November, 2020

8. ERTS (T) 65/2017/Pt.II/199 - dated 1-10-2020 - Meghalaya SGST

Seeks to notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020

9. ERTS (T) 65/2017/Pt.II/198 - dated 1-10-2020 - Meghalaya SGST

Corrigendum - Notification No. 72/2020-Meghalaya Tax, dated the 30th September, 2020

10. G.O. Ms. No. 70 - dated 30-11-2020 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 9, dated the 1st April, 2020

11. G.O. Ms. No. 66 - dated 30-11-2020 - Puducherry SGST

Appoints the 10th day of November, 2020, as the date on which the provisions of section 7 of the Puducherry Goods and Services Tax (Amendment) Act, 2020 shall come into force

Income Tax

12. 90/2020 - dated 15-12-2020 - IT

U/s 138(1) of IT Act 1961 - Central Government specifies Secretary, Citizen Resources Information Department, Government of Haryana

Circulars / Instructions / Orders

DGFT

1. 32/2015-2020 - dated 16-12-2020

Amendment in Para 2.60 of Handbook of Procedure, 2015-2020

Highlights / Catch Notes

GST

• GST Refund Claim Rejected Due to Silent Notice; Violation of Natural Justice Principles Leads to Reconsideration.

  Case-Laws - HC : Refund of GST - petitioner submits that on account of inward supply of inverted rated inputs the petitioner was entitled to refund - For the sole reason that the order rejecting the claim is based upon a silent show cause notice, there are no hesitation in holding that the principles of natural justice have been violated while adjudication of refund claim of the petitioner. - Matter restored back - HC
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• Court Denies Petition for GST Portal Access Due to Lack of Evidence, Claims Deemed Baseless and Without Merit.

  Case-Laws - HC : Seeking Direction to respondents to accept the request for access to GST portal enabling the petitioner to upload return for the periods from the implementation of GST - There is no explanation as to how and in what manner the petitioner has not been able to open the portal nor any photo copy of the proof has been attached or the circumstances in which the returns could not have been accepted is not explained. - The contention of the petitioner is baseless, devoid of merit and no ground for interference is made out - HC
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• Court Denies Bail Request in Rs. 10.89 Crore GST Input Tax Credit Fraud Case; Investigation Ongoing.

  Case-Laws - HC : Grant of Regular Bail - wrongful availment and utilization of input tax credit - The GST amount involved for the operations carried out by him for the period from 01.7.2017 to 31.08.2020 is ₹ 10.89 crores. Admittedly, the investigation is pending - this Court is not inclined to grant regular bail to the petitioner. - HC
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Income Tax

• High Court Rules Defective Notice Invalid u/s 271(1)(c); Assessee's Explanation Sufficient to Avoid Penalty.

  Case-Laws - HC : Penalty u/s 271(1)(c) - defective notice - the phraseology, which was adopted by the assessee, if read as a whole, would clearly show that he had objected to the issuance of the notice and as there was no basis for issuance of the notice under Section 271(1)(c) of the Act, both limbs in the said provision do not get attracted. - the burden cast upon the assessee to offer an explanation stands fulfilled. - HC
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• Withholding tax certificates u/s 197(1) valid from April 1, 2019, per India-UK Double Taxation Avoidance Agreement.

  Case-Laws - HC : Withholding certificate u/s 197(1) as effective from 1st April, 2019 for Financial Year - income/profits are not chargeable to tax under Article 8 of India-UK DTAA r/w Section 90(2) - No reason to deny the relief sought for in the present petition. Accordingly, it is declared that the withholding tax certificates issued by the respondents which are the subject matter of the present writ petition shall be effective from 1st April, 2019 for FY 2019-20. - HC
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• Court Rules Assessee is Employer of Seconded Employees; No Tax Deduction at Source Needed u/s 195.

  Case-Laws - HC : TDS u/s 195 - secondment agreement for an employee - the assessee for all practical purposes has to be treated as employer of the seconded employees. There is no obligation in law for deduction of tax at source on payments made for reimbursement of costs incurred by a non resident enterprise and therefore, the amount paid by the assessee was not to suffer tax deducted at source under Section 195. - HC
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• Loan Waiver Deemed Income? Case Sent Back to Assessing Officer for Further Details Under Income Tax Act Sections 28(iv) & 41(1.

  Case-Laws - HC : Waiver of the loan - Deemed income either u/s.28(iv) or under Section 41(1) - In the absence of any particulars pertaining to the previous years books of accounts, it is difficult to arrive at a decision and therefore, in order to grant one more opportunity for production of books and accounts to substantiate their case, we are inclined to remit the matter back to the AO - ICICI Bank also directed to submit the entire particulars regarding the loan transaction with the assessees - HC
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• Reassessment Valid u/s 143: Must Rely on New, Tangible Evidence Beyond Initial Proceedings.

  Case-Laws - HC : Validity of reopening of assessment - original proceedings for assessment were by way of an intimation under Section 143(1)(a)/143(1) - We find no legal infirmity in the initiation of proceedings for re-assessment in this case. Re-assessment, be it within or beyond four years, has to be based on tangible material dehors that which is available on record, that has come to the notice of the AO. - HC
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• Trust's 12AA Registration Rejected: Activities Not Charitable u/s 2(15) of Income Tax Act Due to Fees and Rentals.

  Case-Laws - AT : Application of registration u/s.12AA rejected - charitable activity u/s 2(15) - Section 2(15) defines charitable purpose for the purpose of the Act and includes relief of the poor education, medical relief and the advancement of any other object of general public utility. But in the present case, the assessee trust is collecting fees from different organisations towards training programme and also received rent for letting out the part premises. Nowhere, the assessee has done the work, which can be treated as charitable purposes. - AT
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• Transaction Classified as Sale: No Tax Deduction Required u/s 194H for Assessee's Dealings with Stockiest.

  Case-Laws - AT : TDS u/s 194H - Commissioner (Appeals) correctly held that the transaction between the assessee and the stockiest is in the nature of sale. Therefore, there is no need to deduct tax at source under section 194H of the Act on margin allowed to the stockiest as provisions of section 194H of the Act would not be applicable to the margin allowed to the stockiest. - AT
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• Assessment Reopening Invalid: ITO Lacked Jurisdiction After Legal Transfer in 2012, Section 124(3) Not Applicable. CIT Challenge Fails.

  Case-Laws - AT : Validity of reopening of assessment - jurisdiction of ITO - In the appellant's case, the provision of section 124(3) does not come into play since the case of the assessee was legally transferred by the competent authority u/s. 127 as far back as in the year 2012. - Section 124(3) of the Act does not come into play in this case and so in no way help the Department to justify the action of ITO, Ward-5(3), Kolkata in issuing statutory notices to the assessee, which action itself was without jurisdiction. So the challenge raised by the Ld CIT, DR fails. - AT
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• Late Fees u/s 234E for TDS Delays Only Valid Post-June 1, 2015; Prior Adjustments Invalid.

  Case-Laws - AT : Levy of late fee u/s 234E - delay in delivering the quarterly TDS statement as well as TDS return - Once the amendment is held to be prospective, the AO gets the jurisdiction/power to make the adjustment only w.e.f. 01.06.2015 and therefore, prior to 01.06.2015 it was not within the jurisdiction of the AO to make the adjustments on account of levy of late fee u/s 234E of the Act. Accordingly, the adjustments made by the AO while issuing intimation u/s 200A(1) of the Act, is not sustainable and the same is deleted. - AT
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• Assessee's Claim of Gifts Rejected; Unexplained Investments in Furniture, Electronics Assessed u/s 69 of Income Tax Act.

  Case-Laws - AT : Unexplained investment in furniture and fixture u/s 69 - The claim of the assessee that he received those items of furniture & electronics appliances from his father cannot be accepted without any documentary evidences in support. - AT
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• Assessee's Payments to Harvesters and Transporters Trigger TDS Deduction Duty u/s 194C; Disallowance Upheld.

  Case-Laws - AT : TDS u/s 194C - payment to harvesters/transporters - the payments made by the assessee were not made on behalf of the farmers, in such scenario, there is a strict relationship between the assessee and the contractor/transporter as that of the contractor and the contractee and in such circumstances, the assessee was under the legal obligation to deduct TDS u/s 194C and since this legal obligation was not fulfilled by the assessee, therefore, disallowance u/s. 40(a)(ia) as confirmed by CIT (Appeals) is hereby sustained. - AT
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• Sponsorship and promotional income addition deleted as marketing income net of expenses wasn't separately recognized.

  Case-Laws - AT : Rectification of mistake - Addition of sponsorship and promotional income received by assessee - Authorities below failed to appreciate that marketing income been considered as net of expenses, and therefore does not appear separately having credited under the head income. - Additions deleted - AT
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• ITAT rules late filing of Form No.10 doesn't bar income accumulation benefit u/s 11(2); seen as technical lapse.

  Case-Laws - AT : Exemption u/s 11 - delayed filing of Form No.10 - disallowance of benefit of accumulation of income as per section 11(2) - ITAT has held in a number of decisions that the assessee can file Form No.10 at any time during assessment proceedings and which has to be considered for granting benefit u/s 11(2) of the Act and the non filing of the same is a mere irregularity and technical lapse which needs to be condoned - AT
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• Court Rules Section 194H TDS Inapplicable to Payments via National Financial Switch and Cash Tree Consortium.

  Case-Laws - HC : TDS u/s 194H - payment made towards the service charges rendered by M/s. NFS - Even assuming that the transaction was being routed to National Financial Switch and Cash Tree, then also it is pertinent to mention here that the same is a consortium of banks and no commission or brokerage is paid to it. - It does not act as an agent for collecting charges. - provisions of Section 194H of the Act are not attracted to the fact situation of the case. - HC
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Customs

• Seized Betel Nuts' Provisional Release: Revenue Must Prove Foreign Origin; 25% Deposit Condition Unjustified Under Customs Act Section 123.

  Case-Laws - AT : Provisional Release of seized Betel Nuts - betel nuts are not notified items in terms of section 123 of Customs Act and as such, the onus to prove that the same are of foreign origin and their smuggled character lies heavily on the Revenue - In the absence of the same, the provisional release subject to heavy condition of deposit of 25% of the seized value cannot be held to be justified. - AT
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Corporate Law

• Company Winding Up Case Transferred to NCLT Under IBC; No Irreversible Actions Taken Yet, Per Section 434(1)(c) Proviso.

  Case-Laws - SC : Winding up of Appellant Company - Transfer of winding up petitions from the Company Court to be tried by the NCLT under IBC - Despite the fact that the liquidator has taken possession and control of the registered office of the appellant company and its factory premises, records and books, no irreversible steps towards winding up of the appellant company have otherwise taken place. This being so, the Company Court has correctly exercised the discretion vested in it by the 5th proviso to section 434(1)(c) - SC
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Service Tax

• Court Examines Taxability of Cricket Player's Promotional Activities Under Business Auxiliary Services: Composite Contracts and Legislative Ambiguity.

  Case-Laws - AT : Business Auxiliary Services - Whether the appellant, apart from playing for KKR, also promoted logos/brands/marks of franchisee/sponsors so as to make the services taxable under BSS? - it is a settled principle of law that if no machinery exists to exclude non-taxable service, a composite contract is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. - AT
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• TV Show Anchoring: Is It a Taxable Promotional Activity Under Business Auxiliary Services (BAS)? Show Cause Notice Crucial.

  Case-Laws - AT : Business Auxiliary Services - Whether anchoring in TV show was a promotional activity for the promotion of service which the TV channel provided so as to make the service taxable under BAS? - if the show cause notice has not called upon the appellant to submit any reply on this aspect of the demand, the said demand could not have been confirmed. - AT
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• Celebrity Brand Ambassador Services Taxable u/s 65(105)(zzzzq) of Finance Act From July 1, 2010.

  Case-Laws - AT : Business Auxiliary Services - celebrity image as a ‘brand ambassador’ for promotion and marketing/sale of various products - the activity carried out by the appellant could not have been subjected to levy of service tax under BAS prior to July 1, 2010 and would only be taxable w.e.f July 1, 2010 under section 65(105)(zzzzq) of the Finance Act. - AT
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• No Service Tax on Export Services to Foreign Companies Before February 27, 2010, Per Amended Rule 3(2) of 2005 Rules.

  Case-Laws - AT : Demand of Service Tax - services rendered to foreign companies - export of services or not - The only requirement after the amendment in rule 3 (2) of the 2005 Rules is that the service recipient should be situated outside India and consideration should be received in foreign currency. Both the conditions stand satisfied. Even otherwise, for the period prior to February 27, 2010, it has been held that no service tax could be levied. Thus, it was immaterial as to whether the appellant was able to substantiate the quantum of services provided after February 27, 2010 and the consideration received thereon. - AT
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Case Laws:

• GST

• 2020 (12) TMI 582
  Refund of GST - petitioner submits that on account of inward supply of inverted rated inputs the petitioner was entitled to refund - period April 2018 to July 2018 - HELD THAT:- There are no hesitation in holding that in quasi judicial proceedings that too relating to financial adjudication, the proposed reasons for rejection should be specifically contained and informed to the assessee so as to enable him to give his reply in a conclusive and reasonable manner. The perusal of the show cause notice in the present case fall short of all the known principles of natural justice and no prudent man could have given reply to the kind of show cause notice, which was served upon the petitioner. For the sole reason that the order rejecting the claim is based upon a silent show cause notice, there are no hesitation in holding that the principles of natural justice have been violated while adjudication of refund claim of the petitioner. The respondent no. 2 is directed to passed a fresh order on the application of the petitioner, for refund, already filed by the petitioner under Form RFD-01, after supplying all the requisite documents and the ground on which the department proposes to reject the application and after giving an adequate opportunity of hearing to the petitioner in accordance with law - petition allowed.

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• 2020 (12) TMI 581
  Constitutional validity of Rule 117 of the Central Goods and Services Tax Rules, 2017 - online submission of Form GST TRAN-1 within a specified period - HELD THAT:- Rule 117 of the C.G.S.T. prescribing time frame is in consonance with the provision of Section 140 of the C.G.S.T. Act, 2017 as amended by the Finance Act 2020 (12 of 2020) with retrospective effect from 01.07.2017. As jointly prayed by learned counsel for the parties, put up as a fresh case on 16th December, 2020.

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• 2020 (12) TMI 580
  Attachment of Bank Account of petitioner - Cancellation of GST registration - Section 83 of the CGST Act, 2017 - HELD THAT:- List on 8th January, 2021. The respondents shall file their counter affidavits, if required, within two weeks from today. Rejoinder thereto, if any, be filed within two weeks thereafter.

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• 2020 (12) TMI 579
  Seeking Direction to respondents to accept the request for access to GST portal enabling the petitioner to upload return for the periods from the implementation of GST - It is submitted that there is no proof that the GST portal of the petitioner has been blocked after 31.3.2018 - HELD THAT:- There is no force and merit in the submission of the counsel for the petitioner. There is no proof that the petitioner had actually opted for the portal. The composition is not permitted as the portal only permits for filing of the GSTR 4 - There is no explanation as to how and in what manner the petitioner has not been able to open the portal nor any photo copy of the proof has been attached or the circumstances in which the returns could not have been accepted is not explained. The contention of the petitioner is baseless, devoid of merit and no ground for interference is made out - Petition dismissed.

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• 2020 (12) TMI 578
  Grant of Regular Bail - wrongful availment and utilization of input tax credit - availment of input tax credit on the basis of the invoices / bills issued without supply of actual goods or services - offence under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act which is punishable under Section 132(1)(i) of the CGST Act - HELD THAT:- The modus operandi adopted by the petitioner is that he indulged in issuing GST invoices and e-way bills and passing on input tax credit to various customers without actual supply of goods. It is also specifically mentioned in the remand application that the registered office and also the factory of the petitioner are non-existent one. According to the respondent authorities, the bank has sold the unit of the Company by invoking the procedure laid down under SARFAESI Act. Both the registered office and the factory are found to be not in possession of the Company since 2016. The petitioner has filed irregular inward ITC credit of Rs. 5.46 crores and outward irregular ITC credit of Rs. 5.43 crores from 01.07.2017 to 31.08.2020. In the statement recorded under Section 70 of the CGST Act, the petitioner has admitted that presently there is no registered premises of the factory. The business is being run by him from the vehicle viz., Grey Colour Swift Dezire TS07 1667. He is also conducting business by using his laptop and mobile No.9493895762. He has answered that based on the invoices created in the laptop, he has raised documents like e-way bills using hotspot and transfer documents created through e-mail [email protected]. He also answered that he will submit all the related documents like invoices, e-way bill after retrieval from his mail, as far as possible. Due to ongoing investigation, the department could lay its hand on an amount of Rs. 42,90,133/- in the electronic credit ledger of the Company of the petitioner. Further, a provisional attachment order under Section 83 of CGST Act was issued to the banker of the Company. Steps have been undertaken to get the laptop recovered under panchanama dated 02.11.2020 to be forensically examined by CFSL, Hyderabad. Such forensic science laboratory report is awaited - Steps have been taken to prevent further loss to the Government exchequer by blocking the ITC credit under Rule 86A(1)(a) of the CGST Act as the competent authority i.e., the Additional Director General has accorded approval along with reasons to believe that the ITC has been fraudulently availed and is ineligible due to two counts i.e. the petitioner has availed credit on fake invoices obtained without supply of goods and Company of the petitioner not conducting business from its registered place. There are several aspects to be investigated into by the investigating officer during the course of investigation. The modus operandi said to have been adopted by the petitioner in commission of offence is to be investigated into by the investigating officer. The GST amount involved for the operations carried out by him for the period from 01.7.2017 to 31.08.2020 is Rs. 10.89 crores. Admittedly, the investigation is pending - this Court is not inclined to grant regular bail to the petitioner. Petition dismissed.

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• Income Tax

• 2020 (12) TMI 577
  Re-opening of assessment u/s 148 - computation of deduction under section 35(1)(iv) - ITAT held that the order of re-assessment was bad in law. However, the Tribunal examined the issue on merits and gave the findings on merits - HELD THAT:- Once the order of re-assessment was set aside, the Tribunal ought not have adjudicated the issues involved in the appeal on merits. There was no need for remanding the matter to the Assessing Authority. - Decided in favour of assessee.

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• 2020 (12) TMI 576
  Income from house property - ITAT determining the Annual value for an under construction building on notional basis under sections 22 and 23 - HELD THAT:- As noted in the return of income filed for the Assessment Year 2011-12 assessee has admitted the rental income of Rs. 30,00,000/- from letting out the school in question. However, the Tribunal has not appreciated the aforesaid aspect of the matter and in a cursory manner, has held that the revenue authorities have rightly brought the income to tax as the assessee has not been able to produce any evidence to the contrary. The findings recorded by the authorities under the Act is based on surmises and conjectures and has to be termed as perverse. First substantial question of law is answered in favour of the assessee and against the revenue. Treating the fee paid towards the regularization of additional construction as against the sanctioned plan as penalty - HELD THAT:- The second substantial question of law is answered against the assessee and in favour of the revenue in view of the judgment of M/S. PRESTIGE ESTATES PROJECTS LTD. [ 2020 (11) TMI 952 - KARNATAKA HIGH COURT] for the present. However, the same shall be subject to decision of special leave petition which is pending before the Supreme Court.

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• 2020 (12) TMI 575
  MAT applicability u/s 115JB applicability to the insurance companies - HELD THAT:- As per the amendment culled in the Act, the issue has to be decided by the Tribunal, however, due to inadvertence, the Tribunal has observedthat Section 115JB is not applicable to the insurance companies and therefore, held that there is no infirmity in the order passed by the CIT (Appeals). Since the provision has been made applicable to the Insurance companies as well with effect from 01.04.2003, the Tribunal has to decide the issue on merits for the assessment year 2013-2014 and decide as to whether the assessing officer was right in computing dis-allowance reserved for unexpired risk provision towards IBNR / IBNER claim and dis-allowance u/s 14(A) read with Rule 18 and the Tribunal to take a decision on merits and in accordance with law, therefore, the matter has to be remanded to the Tribunal for fresh consideration, accordingly, the observations made by the Tribunal in the impugned order are set aside, insofar as it relates to assessment year 2013-2014 and the matter is remanded to the Tribunal to decide the issue with regard to the computation under book profit and whether the assessing officer was right in his computation.

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• 2020 (12) TMI 574
  Penalty u/s 271(1)(c) - defective notice - non specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars - HELD THAT:- Admittedly, the notice did not specifically mention as to whether the assessee concealed particulars of his income or furnished inaccurate particulars or both. Such notices, which did not specify as to which limb of Section 271(1)(c) of the Act would get attracted, were held to be bad in law in the decision of CIT Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] - we can safely hold that such notices are bad in law. Consequently, the penalty proceedings initiated are to be held to be wholly invalid. Whether there is any concealment of particulars of the assessee s income ? - mistake done by the assessee was to treat both the lands as agricultural lands - AO is incorrect because while completing the assessment under Section 143(3) of the Act, there was no allegation against the assessee as to furnishing of inaccurate particulars. But, AO did not accept the explanation offered by the assessee and made certain additions, which will not automatically result in interpreting the same as furnishing of inaccurate particulars - there is no specific finding as regards the concealment against the assessee because, on facts, it has been established before the Assessing Officer while completing the assessment under Section 143(3) of the Act that all transactions were through banking channels. In the instant case, the assessee offered an explanation and we find the explanation to be cogent because all deposits were made through banking channels and out of two properties sold, the AO accepted the assessee s stand that one of the properties was an agricultural land. Hence, we find that the burden cast upon the assessee to offer an explanation stands fulfilled. Consequently, the burden now shifts to the Revenue to establish the concealment of income or furnishing of inaccurate particulars of income or both. If the Revenue does not agree with the explanation offered by the assessee as in the instant case, then the onus is on the Revenue to prove that there was concealment of particulars of income or furnishing of inaccurate particulars of income. We find this aspect to be completely absent in the instant case. Therefore, we also find the imposition of penalty to be unjustified. In the case on hand, we find that at the first instance, while replying to the penalty show cause notice dated 30.3.2016, the assessee raised a specific plea that there was no concealment of income, that he had not furnished inaccurate particulars of income and that the notice was not proper. Therefore, the phraseology, which was adopted by the assessee, if read as a whole, would clearly show that he had objected to the issuance of the notice and as there was no basis for issuance of the notice under Section 271(1)(c) of the Act, both limbs in the said provision do not get attracted. - Decided in favour of assessee.

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• 2020 (12) TMI 573
  Withholding certificate u/s 197(1) as effective from 1st April, 2019 for Financial Year - income/profits are not chargeable to tax under Article 8 of India-UK DTAA r/w Section 90(2) - Petitioner is engaged in the business of operating aircraft in international traffic and its revenue/income in relation to its international air traffic to and from India is derived from ticket sales and cargo traffic - HELD THAT:- Having perused the record and considering the fact that the parties to whom the withholding tax certificates were issued for the FY 2018-19 are the same, we have no reason to doubt that the Petitioner was incapacitated from making applications as per the online format for all the parties for whom it wanted to have the withholding tax certificates issued. Petitioner has also asserted that it could not make an application for more than 3 TANs initially, and thereafter, when the system allowed for applying for 50 TANs, multiple applications could not be made. With the initial application, Petitioner also enclosed the particulars of 337 parties for whom similar certificates were requested. The only plausible reason the names could not be added in the designated fields, was the technical inadequacy of the system. That said, concededly, for the TANs in the said list, the Revenue subsequently has indeed issued certificates.No reason to deny the relief sought for in the present petition. Accordingly, it is declared that the withholding tax certificates issued by the respondents which are the subject matter of the present writ petition shall be effective from 1st April, 2019 for FY 2019-20. The interim orders are made absolute.

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• 2020 (12) TMI 572
  Exemption u/s 10(23)(vi) - whether the present petitioner, namely Bihar Combined Entrance Competitive Examination Board would be entitled for exemption? - HELD THAT:- We are of the considered view that the authority below, while concluding that the petitioner was not an educational institution, did not have complete material, including as to whether it was generating any profit by taking fees for conducting the examination. After the matter was heard for some time, learned counsel for the parties were ad-idem that the matter can be remanded back to the authority for consideration afresh, by affording opportunity to the parties to place all material, enabling the authority to arrive at a decision in accordance with law.

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• 2020 (12) TMI 571
  Validity of assessment - no notices u/s 143(2) have been issued even prior to the disposal of the objections filed by the petitioner challenging the assumption of jurisdiction - HELD THAT:- This is contrary to the procedure laid down by the Supreme Court in GKN DRIVESHAFTS (INDIA) LTD. [ 2002 (11) TMI 7 - SUPREME COURT] and the notices under Section 143(2) are thus not tenable. As far as the 5th year is concerned, though no notice under Section 143(2) has been issued, the objections have not been disposed till date. While keeping the impugned notices issued under Section 143(2) in abeyance, R1 is directed to dispose the objections filed by the petitioner to the assumption of jurisdiction within a period of two (2) weeks after hearing the petitioner either by way of physical hearing or virtually. For this purpose, the petitioner will appear before the Assessing Authority on Monday, the 7th of December, 2020 at 10.30 a.m. without awaiting any further notice in this regard. The mode of hearing alone shall be intimated to the petitioner in advance.

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• 2020 (12) TMI 570
  TDS u/s 195 - assessee in default under Section 201(1) - expenses incurred by the assessee for hotel and traveling expenses - Expenses incurred towards salary - whether the same can be treated as expenses for providing technical services? - secondment agreement - As submitted that mere deputation of the employees doesn t amount to making available technical Know-How - HELD THAT:- Assessee had entered into a secondment agreement for securing services to assist assessee in its business. The expenses incurred by the seconded employees which were reimbursed by the assessee is not liable to deduction to tax at source and the aforesaid amount could not be considered as fees for technical services - secondment agreement constitutes an independent contract of services in respect of employment with assessee. From the perusal of the key features of the agreement, which have been reproduced by the Commissioner of Income Tax (Appeals), it is evident that the seconded employees have to work at such place as the assessee may instruct and the employees have to function under the control, direction and supervision of the assessee and in accordance with the policies, rules and guidelines applicable to the employees of the assessee. The employees in their capacity as employees of the assessee had to control and supervise the activities of Msource India Pvt. Ltd. Therefore, the assessee for all practical purposes has to be treated as employer of the seconded employees. There is no obligation in law for deduction of tax at source on payments made for reimbursement of costs incurred by a non resident enterprise and therefore, the amount paid by the assessee was not to suffer tax deducted at source under Section 195. Similar view has been taken by High Court of Delhi in HCL INFO SYSTEM LTD. [ 2004 (1) TMI 16 - DELHI HIGH COURT] in respect of salaries paid to foreign technicians on behalf of the assessee. - Decided in favour of assessee.

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• 2020 (12) TMI 569
  Benefit of Vivad Se Vishwas Scheme ( VVS Scheme ) - consideration on account of certain subsequent developments - HELD THAT:- As observed, the assessee is given liberty to restore these appeals in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeals and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. We direct the appellant / assessee to file the Form No.I not later than 21.12.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.

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• 2020 (12) TMI 568
  Waiver of the loan - Deemed income either u/s.28(iv) or under Section 41(1) - HELD THAT:- When a portion of the loan is waived, the total amount of loan shown on the liabilities side of the balance sheet is reduced and the amount shown as capital reserves, is increased to the extent of waiver. A careful perusal of the Assessment order and the subsequent orders of the Appellate Authority show that in the absence of particulars sought for by the Assessing Officer and substantiating records and books of accounts with regard to the previous assessment orders for the previous years, they have arrived at the decision that waiver of the loan is based on the receipt and the income is taxable under section 28(iv) and 41(i) of the Act. - It is the duty of the assessees to furnish all the particulars including the accounts of the previous years. Unless the entire books of accounts of the assessees are submitted in the previous years, it is difficult to say how the assessees had treated the amount in their books of accounts. In the absence of any particulars pertaining to the previous years books of accounts, it is difficult to arrive at a decision and therefore, in order to grant one more opportunity for production of books and accounts to substantiate their case, we are inclined to remit the matter back to the Assessing Officer. Accordingly, the order of the Income Tax Appellate Tribunal is set aside and the matter is remitted back to the Assessing Officer and the appellants/assessees are directed to submit the entire particulars including books of accounts for the year 2003-2004 and also of the previous years. ICICI bank also shall submit the entire particulars regarding the loan transaction with the assessees. The Assessing Officer, after giving reasonable opportunity to the assessees as well as the Bank, for submission of the entire particulars, is directed to consider all the particulars and pass orders.

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• 2020 (12) TMI 567
  Addition towards valuation of closing stock - Whether addition towards valuation of closing stock would arise only when the stock continues to be held by the assessee in the next year and not in a case where the business of the assessee along with stock was taken over by a company on 08.01.2012? - HELD THAT:- This is a mixed question of fact and law, which has to be considered because the revenue did not dispute the fact that the business of the assessee along with the stock was taken over by the company on 08.01.2012, therefore, we deem it appropriate to remand the matter to the assessing officer for fresh consideration on this aspect after due opportunity to the assessee. For the above reasons, the Tax case Appeal is allowed. The impugned order passed by the Tribunal is set aside and the matter is remanded to the Assessing Officer to verify the aspect, which has been pointed out in the preceding paragraphs.

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• 2020 (12) TMI 565
  Validity of reopening of assessment - original proceedings for assessment were by way of an intimation under Section 143(1)(a)/143(1) - HELD THAT:- Intimation under Section 143(1) dated 15.12.2016 was issued after the return was electronically processed by the Central Processing Centre (CPC), Bangalore. No notice under Section 143(2) was issued. This was followed by a notice under Section 148 dated 12.02.2018 issued on the basis that there was escapement of income. As required statutorily, the petitioner filed a return of income on 01.03.2018 and sought the reasons on the basis of which the proceedings for re-assessment had been initiated. The return of income filed by Indian Syntans was accompanied by financials that contained a note explaining the lease transaction and a perusal of the reasons for re-assessment make it clear that the reasons are based entirely upon the documentation accompanying the return and no material extraneous to that already on record or anew, has been discovered by the respondent indicating income that had escaped taxation. This is the position both as regards the lease income as well as the claim of administrative expenses. In such circumstances, the escapement of income, if any, cannot be attributed to the assessee. A full and true disclosure has been made in so far as all material germane to the computation of income forms part of the return of income. AY 2015-16 - The mere fact that the respondent had not originally taken the return up for scrutiny by issuing notice under Section 143(2) would not debar the Department from initiating proceedings for re-assessment. The impugned proceedings for re-assessment are, according to the reasons for re-assessment as well as the counter filed by the respondent, based upon certain discrepancies noted in the figure of bad and doubtful debts in the statement of computation of income and the financials. Thus, find no legal infirmity in the initiation of proceedings for re-assessment in this case. Re-assessment, be it within or beyond four years, has to be based on tangible material dehors that which is available on record, that has come to the notice of the AO. Once an intimation has been issued, be it manually by the AO or electronically by CPC, the mechanism for selection of returns for assessment must be robust, ensuring that issues requiring scrutiny are picked up promptly and addressed in time. If the Department lets sail this ship, recourse to proceedings for re-assessment is available only if the department comes into possession of material apart from that already available as part of its records or if the primary particulars reveal discrepancies that are not explained or resolved by the accompanying documentation. This is subject, therefore, to the assessee having placed on record all material necessary for the appreciation of the issues arising for assessment including financials and annexures along with its return of income, at the first instance. The impugned proceedings for re-assessment, in this case are held to be valid and will continue by issue of notice. After hearing the petitioner either over video conference or physically as per mutual convenience of the parties, let an order of re-assessment be passed in accordance with law, within a period of eight (8) weeks from date of uploading of this order

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• 2020 (12) TMI 564
  Rectification u/s 254 - Nature of expenditure on non-compete fee/payment - depreciation claimed on the said non-compete fee - HELD THAT:- Being the jurisdictional High Court decision, we have followed Sharp Business system [2012 (11) TMI 324 - DELHI HIGH COURT] and accordingly taken a view that the depreciation claimed on the said non-compete fee cannot be allowed. Thus, we do not entertain the arguments in this part of the Misc. Application and the issue related to this in present misc. application is dismissed.

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• 2020 (12) TMI 563
  Application of registration u/s.12AA rejected - charitable activity u/s 2(15) - without providing proper opportunity of hearing to the assessee and on the ground that the activities are commercial in nature - HELD THAT:- Assessee filed application in Form No.10A, for registration u/s.12AA - CIT(E) has issued notices to the assessee to produce its original memorandum of association/trust deed for verification, in response to which, the assessee has filed reply on 3.9.2019. Later on also the case was posted for hearing on 11.9.2019 and ld A.R. of the assessee attended the hearing and the matter was discussed. From the above, it cannot be inferred that the assessee was not provided proper opportunity of hearing. Section 2(15) of the Income-tax Act defines charitable purpose for the purpose of the Act and includes relief of the poor education, medical relief and the advancement of any other object of general public utility. But in the present case, the assessee trust is collecting fees from different organisations towards training programme and also received rent for letting out the part premises. Nowhere, the assessee has done the work, which can be treated as charitable purposes. Hence, we dismiss the appeal of the assessee.

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• 2020 (12) TMI 562
  Rectification of mistake - TP Adjustment - adjustment on account of Advertisement, Marketing and Promotion Expenditure ( AMP ) as alleged international transaction - TPO intended to make transfer pricing adjustment on account of alleged excessive AMP expenditure as an international transaction on substantive basis using intensity method and bright line method on protective basis, as was done in AY 2010-11 in the second round of proceedings (i.e., post remand by the Tribunal) - whether there exists an international transaction of AMP expenses, the Tribunal in Assessment Year 2011-12 categorically held that if the existence of such an international transaction is not proved, the mater will end there and then, calling for no transfer pricing addition - HELD THAT:- Remanding back the question as to whether there exists an international transaction of AMP expenses, the Tribunal in Assessment Year 2011-12 categorically held that if the existence of such an international transaction is not proved, the mater will end there and then, calling for no transfer pricing addition. In terms of Section 154(1A) of the Act wherein it has been laid that where any matter has been considered and decided in any proceedings by way of appeal or revision relating to an order referred to in sub section (1), the authority passing such order, may notwithstanding anything contained in any law for the time being in force, amend the order under that sub section in relation to any matter other than the matter which has been so considered and decided. The order of the Appellate Tribunal having become final and after the final decision of the Appellate Tribunal, the Revenue could not initiate fresh assessment proceedings, as the order of the Tribunal was binding on the Revenue. It was noted that various High Court had expressed a similar view. Thus, the questions which are expressly raised before or decided by the appellate or revisional authority cannot be re-agitated and no rectification proceedings will be maintainable in respect thereof, under section 154 of the Income Tax Act, 1961, before the TPO/Assessing Officer in the garb of amending his/her own order. Thus, the assumption of jurisdiction by the TPO/AO u/s 154 is bad in law and void ab intio. Therefore, the assessment order passed by the Assessing Officer on 10.07.2017 is also bad in law and void ab initio, thus, the Assessment order is set-aside.

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• 2020 (12) TMI 561
  Revision u/s 263 - TDS liability on stockiest s margin determined at 2% of the gross sales - HELD THAT:- It is a fact on record that the aforesaid order passed under section 263 of the Act was contested by the assessee before the Tribunal and the Tribunal while deciding the appeal has held that jurisdiction under section 263 of the Act was wrongly exercised and accordingly set aside the order passed under section 263 of the Act. Thus, when the order passed under section 263 of the Act has lost its existence by virtue of the order of the Tribunal, all proceedings consequent to the order passed under section 263 of the Act would automatically become invalid. That being the case, the impugned order dated 28th December 2016 passed under section 201(1)/201(1A) r/w 263 of the Act will automatically lose its existence. TDS u/s 194H - Commissioner (Appeals) correctly held that the transaction between the assessee and the stockiest is in the nature of sale. Therefore, there is no need to deduct tax at source under section 194H of the Act on margin allowed to the stockiest as provisions of section 194H of the Act would not be applicable to the margin allowed to the stockiest.

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• 2020 (12) TMI 560
  Revision u/s 263 - advance taken by the assessee s employee Shri Angad Singh which was shown in the balance sheet as liability in place of asset - Genuineness and reasonableness of the payments made to Shri Angad Singh is required to be verified from the angles of section 37(1) and Section 40(b) read with Section 40A(2) - HELD THAT:- Additional issues for which also Ld. Pr. CIT has given direction to AO for fresh assessment was neither a subject matter of the SCN nor an opportunity was given by the Ld. Pr. CIT before passing the impugned order. CIT, DR after perusal of the order sheet of Ld. Pr. CIT has fairly conceded the fact that there was no mention about Ld. Pr. CIT asking any question to assessee regarding these additional issues to assessee as stated (reproduced supra) in para 4.2 of the impugned order. Therefore, (these additional issuesshould not be given effect to by the AO while carrying out fresh assessment as directed by Ld. Pr. CIT, because these additional issues were not confronted by the Ld. Pr. CIT to the assessee before passing the impugned order, so these additional issues are fragile for violation of Natural Justice and so bad in law as held by Hon ble Supreme Court in Amitab Bachan [ 2016 (5) TMI 493 - SUPREME COURT] - Therefore, we modify the order of Ld. Pr. CIT and direct the AO not to give effect to the additional issues as directed by ld. Pr. CIT in his impugned order. The order of the Ld. Pr. CIT stands modified to that extend as discussed. And the AO to give effect to the order of Ld. Pr. CIT on the issue which was dealt by him in SCN in accordance to law after hearing the assessee.

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• 2020 (12) TMI 559
  Validity of reopening of assessment - jurisdiction of ITO, Ward-5(3) to frame re-assessment order - usurping the jurisdiction - whether the ITO, Ward-5(3) was empowered on 25.03.2014 to give effect to the order of Pr. CIT-II dated 28.03.2013 passed u/s. 263 ? - earlier order dated 28.03.2013 passed u/s. 127 of the Act, by the then CIT-II, Kolkata had transferred the jurisdiction over the assessee s case from ITO, Ward-5(3), Kolkata to the charge of DCIT/ACIT, Central Circle-XVII, Kolkata, on the request of CIT-I dated 8/14.12.2011 - HELD THAT:- In this case, we have noted that ITO, Ward-5(3) got back his power only on re-transfer of assessee s case to him when the order u/s. 127 was passed later on 31.05.2016, so the question of ITO, Ward-5(3), Kolkata giving effect to Pr. CIT-II order dated 28.03.2013 does not rise at all on 25.03.2014. Thus we find that in assessee s case the ITO, Ward-5(3) did not enjoy jurisdiction to assess the income of assessee as an AO between 28 December 2012 and 31 May 2016. ITO, Ward-5(3), Kolkata ceased to be AO of assessee after the transfer order was passed by Ld. CIT-II, Kolkata on 28.08.2012, so after such order by the competent authority (which fact is not disputed before us), then the ITO, Ward-5(3), Kolkata became functus officio and was divested of the jurisdiction. We hold that in the given facts of the case, the appellant s case was not saved by the provisions of Section 124(5) of the Act. Accordingly, the contentions of the Ld. CIT, DR are rejected being devoid of any merit in law as well as on facts. In the appellant s case, the provision of section 124(3) does not come into play since the case of the assessee was legally transferred by the competent authority u/s. 127 as far back as in the year 2012. In the circumstances therefore, as discussed above, once transfer of the case of the assessee is ordered u/s. 127 of the Act, the AO ITO, Ward-5(3), Kolkata who was vested with the jurisdiction by virtue of the direction or order issued under sub-section (1) or (2) of sec. 120 and section 124 of the Act stood divested of the same. As held by the Hon ble jurisdictional High Court in M/s. Ramshila Enterprises Pvt. Ltd. (infra), [ 2016 (5) TMI 17 - CALCUTTA HIGH COURT ] since the jurisdiction was divested of the earlier AO by virtue of transfer order u/s. 127 of the Act, the earlier AO, which in this case is AO i.e. ITO, Ward-5(3), Kolkata ceased to be Assessing Officer after the date of transfer i.e. 28.08.2012 and therefore he (i.e. ITO, Ward-5(3), Kolkata) ought not to have issued statutory notices upon the assessee unless he had been re-empowered or vested by a fresh transfer order u/s. 127 of the Act (i.e. from DCIT, CC-XVII, Kolkata to ITO, Ward-5(3), Kolkata), which is not the case of the Revenue and though it did later happen in this case (Re-transfer as on 31.05.2016). In the circumstances therefore, the ITO, Ward-5(3), Kolkata could not have usurped the jurisdiction when his jurisdiction was divested of it, by order dated 28.08.2012 by Ld. CIT-II, Kolkata u/s. 127 of the Act Section 124(3) of the Act does not come into play in this case and so in no way help the Department to justify the action of ITO, Ward-5(3), Kolkata in issuing statutory notices to the assessee, which action itself was without jurisdiction. So the challenge raised by the Ld CIT, DR fails. Therefore, we do not find any merit in the contention of the Ld. CIT, DR on this score. As the ITO-5(3) Kolkata, did not enjoy jurisdiction over the case of the appellant on 25.03.2014, the re-assessment order passed u/s. 263/143(3) dated 25.03.2014 was legally unsustainable and therefore is null in the eyes of law and therefore quashed - Decided in favour of assessee.

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• 2020 (12) TMI 558
  Addition of interest on advance given for purchase of immovable property u/s 36(1)(iii) - HELD THAT:- Similar issue of issuance has been raised in earlier years also i.e. from 2011-12 to 2012-13. In all these years, such disallowances were deleted and claim of the assessee was allowed by the Tribunal. We have gone through the orders of the CIT(A) and the Tribunal on this issue. We do not find any dissimilarity of facts of this year with that of earlier years. As noted in the assessment order itself that the assessee has sufficient interest free and own funds so as to make investment/advances. In number of authoritative judgments it is held that when there are substantial interest free and own funds, presumption would be that the investment and/or advances were made out of such funds. We do not find any infirmity in the finding of the ld. CIT(A) on this issue. Accordingly following the orders of the Tribunal in the case of assessee for the earlier years, we uphold action of the ld. CIT(A) and dismiss this ground of appeal of the Revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Hon ble jurisdictional high Court in the case of Nirma Credit Capital P. Ltd.[ 2017 (9) TMI 485 - GUJARAT HIGH COURT] has held that for application of Rule 8D(2), disallowance of expenditure to be considered should be net of interest i.e. interest paid minus interest received. In the present case, the assessee has earned higher interest income than the interest paid on the borrowed funds. We find that fact the present case is similar to the issue in the case of Nirma Credit Capital and therefore, in our view this case law supports the case of the assessee. Moreover, ITAT in the assessee s own case for earlier years also allowed similar claim of the assessee. The facts in the present year is also similar to the facts of earlier years, and therefore, following the consistency with the earlier orders, we allow the claim of the assessee, and dismiss the ground of appeal of the Revenue.

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• 2020 (12) TMI 557
  Admission of additional evidence - Purchase of agricultural land - AO stated that the addition was rightly made on account of failure on the part of the assessee to explain satisfactorily the source of investment and objected for admission of additional evidences - HELD THAT:- In the present case, it is an admitted fact that the additional evidences now furnished by the ld. counsel for the assessee in the form of affidavit of the assessee as well as of the seller of land namely Shri Om Parkash from whom the assessee purchased the agricultural land in question, were not available either to the ld. CIT(A) or to the AO for their consideration, however, these new evidences now furnished, go to the root of the matter, therefore the same are admitted. By keeping in view this fact that the evidences now furnished by the ld. counsel for the assessee first time before this Bench of the ITAT were not available to the authorities below and even the letter dated 28.11.2006 written by the then counsel to the ld. CIT(A) appears to be not considered by the ld. CIT(A) since there is no discussion in the impugned order and even that letter was also not available to the AO who passed the assessment order on 28.01.2015 i.e. much before 28.11.2006 and by considering peculiar facts of this case, we deem it appropriate to set aside this case back to the file of the AO to be considered afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee and by considering all the evidences furnished by the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2020 (12) TMI 556
  Disallowance of purchase of software u/s 40(a)(i) for non-deduction of tax at source - A.O. treated the purchases of computer software as payment in the nature of royalty - CIT(A) held that the payment made by the assessee for purchase of software was in respect of copy righted article and accordingly held that disallowance u/s 40(a)(i) of the Act is not called for - HELD THAT:- The instant case relates to the financial year 2009-10 relevant to the assessment year 2010-11 and the payments have been made for purchase of software prior to the date of pronouncement of the decision in the case of Samsung Electronics Company Ltd. [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] and also prior to the amendment of Sec. 9(1)(vi) of the Act. Accordingly, following the above said decision rendered by the Tribunal, we hold that the disallowance u/s 40(a)(i) of the Act cannot be made in the facts of the present case. Accordingly, we confirm the decision rendered by Ld. CIT(A) on this issue on the above said reasoning. Disallowance of provision for warranty - HELD THAT:- As decided in own case [ 2018 (6) TMI 1732 - KARNATAKA HIGH COURT] both the Appellate Authorities below were justified in returning the proper findings of facts on the relevant material before them and have rightly found that the provisions of warranty made by the Respondent-Assessee Company was on the basis of the scientific and consistent method and therefore, the present appeal of the Revenue does not give rise to any substantial question of law and the same deserves to be dismissed and is accordingly dismissed. Disallowance of foreign exchange loss arising on revaluation of foreign exchange exposures as at the year end - AO noticed that the assessee has revalued its assets and liabilities with foreign exchange exposure as at the year end on marked to market basis and declared net gain - A.O. disallowed the loss holding that it is contingent in nature - HELD THAT:- We notice that this issue has been decided in favour of the assessee by coordinate bench of Tribunal in the case of Quality Engineering Software Technologies Pvt. Ltd.[ 2015 (1) TMI 869 - ITAT BANGALORE] wherein held forward contracts are in respect of consideration for export proceeds, which are revenue items. There is an actual contract for sale of merchandise. In this factual matrix, it is clear in our view that the transaction in question will not qualify to be called as speculative transaction. In view of the facts and circumstances of the case on hand, as discussed above, we hold that the provision on derivative contracts is allowable as expenditure. - Decided against revenue.

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• 2020 (12) TMI 555
  Levy of late fee u/s 234E - delay in delivering the quarterly TDS statement as well as TDS return for the respective quarters of this assessment year - whether delay in filing the TDS statement and TDS return would not attract the adjustment while issuing the intimation u/s 200A? - HELD THAT:- Prior to the Amendment to section 200A w.e.f. 01.06.2015, the AO was not given the power to levy for late fee while processing the TDS statement/TDS return. The assessee delivered the TDS statement as well as return much prior to the amendment brought into Statute w.e.f. 01.06.2015 and even the AO has issued intimation prior to such amendment therefore, the adjustments made by the AO without any enabling provision is invalid and unjustified. Once the amendment is held to be prospective, the AO gets the jurisdiction/power to make the adjustment only w.e.f. 01.06.2015 and therefore, prior to 01.06.2015 it was not within the jurisdiction of the AO to make the adjustments on account of levy of late fee u/s 234E of the Act. Accordingly, the adjustments made by the AO while issuing intimation u/s 200A(1) of the Act, is not sustainable and the same is deleted. There are identical facts for the AY 2013-14 wherein the assessee submitted the TDS statement and TDS return on 02.09.2013 which is prior to the amendment w.e.f 01.06.2015. Hence in the absence of any continuous delay, even after the 01.06.2015 the adjustment made by the AO is not justified and the same is deleted. - Decided in favour of assessee.

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• 2020 (12) TMI 554
  Reopening of assessment u/s 147 - addition u/s 68 - Notice u/s 133(6) remaining unserved - AO received information from the office of DGIT (Inv.), Mumbai that those loans were not genuine and they represented accommodation entries taken by the assessee from companies floated by Shri Praveen Kumar Jain his Group - HELD THAT:- The authorities below have not done any enquiry or examination to dislodge the submissions. AO is solely relying upon the aspect that section 133 (6) notices have returned unserved - notices u/s 133(6) enable the assessing officer to obtain information and other explanations from the persons to whom the notices have been served. In the present case we note that all the necessary documents from the loan creditors have been supplied to the assessing officer. They include their bank statement, balance sheet, profit and loss account and confirmation. No adverse inference so much as to treat the unsecured loan as bogus can be drawn solely on the ground of 133(6) notice remaining unserved. The assessee has duly explained before the authorities below that the loans were taken 8 years before and assessee was not in a position to bring the loan creditors before the assessing officer. That loans have also been duly paid back. We note that income tax act contains provision for summoning the concerned person before the assessing officer for examination under section 131(1). However we note that no such summon was issued by the assessing officer. Except for relying upon the income tax investigation wing investigation in the case of Praveen Kumar Jain no other material is there for the assessing officer to make the addition of the impugned loans as unexplained income of the assessee. Assessee having given all the necessary confirmation document has cogently discharged its onus. No attempt whatsoever to dislodge the veracity of these documents is there in the orders of the authorities below. - Decided in favour of assessee.

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• 2020 (12) TMI 553
  Addition on account of credit in bank account of the appellant with Punjab National Bank - unexplained credits in the bank account of the assessee - AO expressed his inability to submit his comments on the ground that the record being very old was not traceable - explanation put forth by the assessee that the credit in the bank account on account of amount received from sale of diamond jewellery was rejected by the AO on the basis of the report of the Investigation Wing - CIT-A upheld the order of the AO only on the ground that the earlier order framed by the AO was based on the report of the Investigation Wing - matter traveled upto the level of the Tribunal and set aside the order of the CIT(A) and restored the issue to the file of the AO for decision afresh on the issue after giving the assessee a reasonable opportunity of being heard - second round of appeal HELD THAT:- Admittedly the directions given by the Tribunal have not been complied with by the AO while framing the impugned assessment in this case. Though the ld. CIT(A) tried to comply with the directions by writing letters to the concerned officers related to the investigation and assessment framed in the case of M/s. Tambi Exports, however, no record was furnished by them in this respect to the ld. CIT(A). Even the Assessing Officer also failed to give his comments on the submissions/objections submitted by the assessee before the CIT(A) stating that the record was very old and was not traceable. Tribunal while setting aside the matter to the AO has given a categorical observation that the report of the Investigation Wing in the case of M/s. Tambi Exports was not conclusive to uphold the additions made by the AO, rather the factum of assessment in the case of M/s. Tambi Exports on the basis of the said investigation report was required to be considered/ascertained and further the evidence brought on record by the revenue is required to be confronted to the assessee and the assessee is required to be given reasonable opportunity of being heard on the same. Admittedly neither the record/evidences as directed by the Tribunal, have been brought on record nor the assessee could get the opportunity to confront the same. The additions made by the lower authorities are not sustainable in the eyes of law and the same are ordered to be deleted.- Decided in favour of assessee.

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• 2020 (12) TMI 552
  Disallowance @ 50% of expenses - Adhoc disallowance of telephone, foreign tour expenses, vehicle related expenses (fuel, maintenance and depreciation), Diwali expenses, office maintenance expenses, staff welfare expenses etc - HELD THAT:- AO has categorically mentioned the fact of examination of books of accounts maintained by the assessee in the impugned assessment order and no adverse observations have been made in respect of the books of accounts. We notice that no specific instance of non-maintenance of the voucher or personal use has been pointed out by the lower authorities for sustainnence of the disallowance out of profit and loss account. It is well settled law that no disallowance of such expenses can be made on adhoc basis without pointing out any specific defect or instance of non-maintenance of vouchers. The disallowance also cannot be made merely on the ground that payment have been made in cash unless the parties to him payment is made are not genuine. No doubt regarding geninuenity of the parties has been raised by the lower authorities. Similarly in respect of foreign tour expenses, the Assessing Officer observed that expenses have been incurred on travel of the assessee and his wife to Malaysia and thus not related to business activity of the assessee. On the contrary, the assessee submitted that his proprietary concern is a prominent dealer of M/s Zenith Computers Ltd., who organises annual meet every year at different places. During those annual meets technical presentation are given to dealers, their common problems are discussed, annual rewards to dealers are distributed and business policies for the ensuing year are also discussed. For attending the dealer meet, the assessee was required to make his own travel arrangement and rest of the expenses like lodging, boarding, local transport etc. were sponsored by M/s Zenith computers Ltd. The ld. AR argued that had this been a pleasure trip, the assessee would have taken his children also along with him, but in view of the business trip, he along with his wife who is business manager, only attended the meet. In view of the submissions, the Ld. CIT(A) has already allowed 50% of the expenses. Sustainance of the balance 50% expenses on ad hoc basis is not justified, when the assessee has explained business purpose of the expenses. We are of the opinion that action of the Ld. CIT(A) in sustaining 50% of the disallowances made by the Assessing Officer that too on adhoc basis is not justified. - Decided against revenue. Unexplained investment in furniture and fixture u/s 69 - HELD THAT:- CIT(A) has though agreed with the possibility of amount being sale proceeds of the old furniture of father and representative sale of the personal asset therefore, it was not taxable, however, he has observed that assessee has not shown any cost incurred on the same and therefore, addition was sustained. In our opinion, the onus was on the assessee to explain that Rs. 99,000/- received was against sale of old furniture and electronic appliances. The assessee has neither produced any agreement with buyer for sale of furniture and electronics appliances nor produced any confirmation from buyer of the house that he has paid Rs. 99,000/- against purchase of furniture installed in said house. The claim of the assessee that he received those items of furniture electronics appliances from his father cannot be accepted without any documentary evidences in support. In absence of any documentary evidence the claim of the assessee is rejected and the addition made by the Assessing Officer is upheld - Decided against assessee.

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• 2020 (12) TMI 551
  TP Adjustment - ALP determination - ALP agreed to between the Government and the assessee - case of the appellant is that, it had signed an Advance Pricing Agreement (APA) with the Central Board of Direct Taxes (CBDT) for five years i.e. F.Y. 01.04.2015 to 31.03.2020 - As per the APA, for management fees for IGS is the amount of management charges paid in the manufacturing segment does not exceed 2.95% of operating revenue of the manufacturing segment of the previous year - whether, when the factual matrix including the functional and risk profile of the assessee with respect to these three years under appeal is similar, to the factual matrix and functional profile of the assessee considered by the CBDT while determining the ALP in the APA, for the five Financial years 2015-16 to 2019-20 and for the rollback period i.e. FY 2012-13 to 2014-15? HELD THAT:- In our view the ALP determined and agreed to in the APA should necessarily be applied as the ALP, on the international transaction of IGS and R D services for the assessment year in appeal. While holding so, we have considered the various judgments one of which is of passed by the Hon ble Delhi High Court in the case of Ameriprise India Pvt. Ltd.[ 2016 (3) TMI 1272 - DELHI HIGH COURT] . We direct the Assessing Officer to adopt the ALP determined in the APA as the ALP of the international transaction of MSSF for IGS and R D services for all the impugned assessment years.

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• 2020 (12) TMI 550
  Exemption u/s 11 denied - registration u/s 12A of the Act was revoked w.e.f A.Y 2009-10 - assessment without considering the restoration of registration u/s 12A - HELD THAT:- We considering the factual aspects and restoration of Registration u/sec 12A of the Act by the Hon ble Tribunal in the year 2016 are of the view that at the time of passing the assessment order for this Assessment year the Assessing officer does not have the knowledge or information that the Hon ble Tribunal has set aside the order of cancellation in the year 2016 as the Assessment order was passed for the present assessment year under 143(3) of the Act on 21.03.2015. Therefore, we are of the substantial view that the assessment without considering the restoration of registration u/s 12A of the Act is not a valid assessment. AR expressed that no action was initiated on order giving effect (OGE) by the A.O and is in the process. The ld. DR also could not give the correct position of the order giving effect (OGE) of the Hon ble ITAT order. We considering the provisions of law and the judicial precedence are of the view that the matter has to be remitted to the file of A.O to consider the restoration of registration granted u/s 12A of the Act in the year 2016 and the order giving effect (OGE) for the A.Y 2009-10 and 2011-12 which is pending before the Assessing officer. Accordingly to meet the ends of justice, we restore the disputed issues in assessee s appeal to the file of the A.O for the limited purpose with the above directions and the A.O has to verify and examine the facts and do the assessment based on the Restoration of registration under 12A of the Act and allow the grounds of appeal of the assessee for statistical purpose.

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• 2020 (12) TMI 549
  Levying penalty u/s. 221(1) - entitled for deduction u/s 80P(2)(a)(i) denied - HELD THAT:- AR demonstrated the copy of income tax return to substantiate the claim. Assessment order was passed u/s 143(3) of the Act disallowing the claim of deduction u/sec 80P - On appeal the CIT(A) has allowed the assessee s claim. Even otherwise, when the quantum addition has been deleted by the appellate authority, penalty on such addition is not sustainable. On perusal of the facts, we found that the assessee has filed the return of income disclosing total income as Rs. Nil and is also evident from page 1 of the assessment order. When the assessee has filed the return of income with Rs. Nil. Income, there is no question of payment self assessment tax. The assessee has bought these facts to the knowledge of the higher authorities but the CIT(A) has confirmed the order of levy of penalty. We considered the facts, submissions and provisions of law and set aside the order of the CIT(A) and direct the Assessing officer to delete the penalty and allow the grounds of appeal of the assessee.

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• 2020 (12) TMI 548
  Revision u/s 263 - AO has passed the assessment order without proper verification/examination of the increase in capital and without making any addition in this regard - non-registration of gift instrument - HELD THAT:- By virtue of non-registration of the gift instrument, in the eyes of law, no transfer of flat takes place, then the assessee s capital account will get reduced by the cost of the flat which has been gifted and then will get reflected in the capital account of the donor Ms. Ankita Kejriwal, thereby increasing her capital account and not that of assessee/appellant. In such an event, there will be no prejudice caused to the Revenue, on account of AO not appreciating the legal effect of non-registration of gift instrument. We note from the enquiry conducted by the AO, assessee had furnished the source of the donor for purchasing the property and we note that other than Rs. 20,050/- the source of fund for purchasing the flat flows from the earlier assessment years. Thus, we note that even if the AO finds that the non-registration of the gift deed would result in non-transfer of the flat would not in any case prejudice the revenue. Therefore, the second limb of the jurisdictional requirement i.e. prejudicial to the revenue does not exist and, therefore, the Ld. Pr. CIT lacks jurisdiction to interfere in the order of the assessment passed by the AO. Since the AO has enquired and elicited the relevant information/documents including the source of Ms. Ankita Kejriwal to buy the flat at Bangalore, the AO s action cannot be faulted as an outcome of lack of enquiry. And since there would be no prejudice caused to the revenue, as discussed, we are of the view that in this case, the twin condition is not satisfied as held in Malabar Industries Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] therefore, the revisionary jurisdiction exercised by the Ld. PCIT u/s. 263 of the Ac was without jurisdiction - Decided in favour of assessee.

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• 2020 (12) TMI 547
  TDS u/s 194C - Disallowance u/s. 40(a)(ia) - payment to harvesters/transporters - HELD THAT:- In the present case of the assessee, there were specific separate contracts entered into by the assessee one with the farmers and another with the transporters and therefore, the farmers were not reaching the sugarcane to the gate of the assessee factory. When the assessee is entering in his own right and capacity in contract and the payment to harvesters/transporters were the liability of the assessee and directly done by the assessee to them, when the farmers were only concerned with the receipt of net sugarcane price fixed before the start of the season and when the facts are crystal clear that the payments made by the assessee were not made on behalf of the farmers, in such scenario, there is a strict relationship between the assessee and the contractor/transporter as that of the contractor and the contractee and in such circumstances, the assessee was under the legal obligation to deduct TDS u/s 194C and since this legal obligation was not fulfilled by the assessee, therefore, disallowance u/s. 40(a)(ia) as confirmed by CIT (Appeals) is hereby sustained. Accordingly, grounds 1 to 4 of the assessee s appeal are dismissed. TDS on transport expenses in view of the provisions of Sec. 194C(6) - HELD THAT:- Since the provisions of Sec. 194C r.w.s. 194C(6) of the Act, imposes a specific liability of deducting TDS with respect to payment made under the contract to a contractor/transporter only and it does not extend to harvester by any state of imagination. The argument of the assessee that the harvester is the same person, who is transporting the cane is absolutely found false and untrue as regards the facts of the assessee s case since we have already analyzed from the facts that there exist two separate agreements one with the farmers and another with the contractor/transporter - there existed the prima facie liability on the part of the assessee to deduct TDS before making payment to these contractors/transporters. There is a clear cut contractor contractee relationship and the assessee cannot escape its legal obligations of deducting TDS - rigours of Sec. 40(a)(ia) of the Act applies to the assessee and the addition is sustained. Accordingly, ground No. 5 is dismissed. Payments to the H T contractors does not exceed both the limits prescribed under Sec. 194C(5) - HELD THAT:- Whether there were some cases where payment made to some contractor does not exceed the limits prescribed under Sec. 194C(5) of the Act or not has not been brought out at all and it requires factual verification.This limited issue with regard to Sec. 194C(5) of the Act is restored to the file of learned Assessing Officer for factual verification and adjudicating of the issue while complying with the principles of natural justice. Ground No. 6 is allowed for statistical purposes. Amendment vide Finance Act, 2014 in respect of Sec. 40(a)(ia) of the Act to restrict the disallowance at 30% instead of 100% and the amendment is w.e.f. from 01.04.2015 - HELD THAT:- Various courts have held that prescribed amendment is retrospective in nature i.e., it will be applicable to the period even prior to 01.04.2015. Ground No. 9 is also restored to the file of learned AO to adjudicate the issue considering relevant judicial pronouncements while complying with the principles of natural justice.

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• 2020 (12) TMI 546
  Levy of penalty u/s 271(1)(c) - assessee has not provided any evidence or document to establish vacancy of the property therefore estimated the rental income from house property - HELD THAT:- Penalty levied by the A.O for concealment of income is beyond the possibility of the assessee to obtain the confirmation as the tenant has already left the premises in the A.Y 2008-09 which was submitted in the penalty proceedings. The A.O cannot ask the assessee to do a impossible task considering the facts and circumstances. We relay on the decision of CIT Vs. Reliance Petroproducts Ltd [ 2010 (3) TMI 80 - SUPREME COURT] and follow the judicial precedents and we set aside the order of the CIT(A) and direct the A.O to delete penalty and allow the grounds of appeal of the assessee.

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• 2020 (12) TMI 545
  Unexplained cash deposits in the specific bank account - as claimed that it was sourced from the sale proceeds of rural agricultural land measuring 14 Kanal 15 Marla situated in village Fatehgarh Channa - HELD THAT:- Tax Authorities have taken an easy route and have placed an impossible burden upon the assessee. As has been noted earlier, it is the duty of the tax authorities to assist tax compliance which means giving correct advice and following best practices. To attempt collecting tax on the basis of ignorance of the citizenry is not expected from a tax administration in a developed economy. In the facts of the present case, the assessee has consistently claimed to be illiterate evidenced by the fact that the relevant documents are carrying a thumb impression. The assessee claimed to be a purely an agriculturist having no other source of income. These facts remain unrebutted on record. Accordingly, considering the principle as laid down in the case of Shri Mangat Singh [ 2019 (1) TMI 1836 - ITAT CHANDIGARH] namely the value of the land at the relevant point of time, the issue is restored back to the file of the CIT(A) with direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

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• 2020 (12) TMI 544
  Rectification of mistake - Addition of sponsorship and promotional income received by assessee - HELD THAT:- The said amount was considered while computing expenses under the head, Marketing Cost before debiting it to P L account. Ld.CIT(A) notes that, clarification was provided by assessee in rectification petition under 154 of the Act before Ld.AO, regarding entries in P L account. Authorities below failed to appreciate that marketing income been considered as net of expenses, and therefore does not appear separately having credited under the head income. Ld.AR submitted that, assessee has considered respective income under relevant heads before debiting expenses to profit and loss account. We therefore do not find any justification in confirming the addition by Ld.CIT(A), and the same is deleted. Addition of reimbursement of security charges received - AR submitted that, security charges received, was reduced under the head Operating cost , forming part of Direct expenses - HELD THAT:- Assessee has submitted that sum of Rs. 35, 85, 414/-is included in Rs. 45, 12, 061/-credited under the head Security Charges at page 5157 in Ledger account. In our view, this aspect needs verification vis-a-vis debit notes/invoices raised. We direct assessee to file relevant documents to establish its claim. Ld.CIT(A) is directed to verify the documents filed by assessee. In the event it is found that Rs. 35,85,414/- is included, as submitted by Ld.AR, the addition may be deleted. Accordingly this ground raised by assessee stands allowed for statistical purposes. Addition in respect of reimbursement of HVAC/Power charges received - AR submitted that, reimbursement is credited to related expenses incurred, and net expenses are considered in statement of P L account as expenditure - HELD THAT:- Said amount was considered while computing expenses under the head, Power Fuel before debiting it to P L account. We note that, authorities below failed to appreciate that Reimbursement of expenses marketing income been considered as net of expenses and therefore does not appear separately having credited under the head income. Ld.AR submitted that, assessee has considered respective income under relevant heads before debiting expenses to profit and loss account. We therefore do not find any justification in confirming the addition by Ld.CIT(A), and the same is deleted.

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• 2020 (12) TMI 543
  TDS u/s. 195 V/S 172 - Demand u/s 201(1) along with interest u/s. 201(1A) - assessee has made reimbursement of demurrage charges to Wilmar Trading Pvt. Ltd. ultimate beneficiary of such demurrage charges - HELD THAT:- ITAT Ahmedabad in the case of Steelco Gujarat Ltd. [ 2017 (1) TMI 1573 - ITAT AHMEDABAD] has held that as long as ship in respect of which freight payments are made is owned or chartered by non-resident or entity which is where provision of section 172 are applicable, provision of section 195 or 194C cannot be invoked. We consider that provision of section 195 are not applicable to the reimbursement of demurrage charges paid to the non-resident shipping company on behalf of the assessee by Wilmar Trading Pvt. Ltd. Further, it is clearly clarified by the CBDT vide circular no. 723 dated 19th Sep., 1995 that as long as the ship in respect of which freight payment is made is owned or chartered by non-resident the provision of section 172 are applicable and the provision of section 195 or 194C cannot be involved. We are not inclined with the decision of the ld. CIT(A) as provision of section 195 of withholding of tax on freight payment to non-resident shipping companies is not applicable as the same are covered by section 172 of the ACT. Therefore, the appeal of the assessee is allowed.

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• 2020 (12) TMI 542
  Exemption u/s 11 - disallowance of benefit of accumulation of income as per section 11(2) - denial of benefit of accumulation for delayed filing of Form No.10 - HELD THAT:- As decided in own case [ 2020 (9) TMI 277 - ITAT CHANDIGARH] if form No. 10 is filed during the continuation of the assessment proceedings that should have been taken into consideration by the Assessing Officer. That non filing of the Form No. 10 within stipulated period may be an irregularity but not illegality, if the assessee cures the defect during assessment proceedings, the assessee is entitled to the benefit of accumulation as provided u/s 11(2) of the I.T. Act ITAT has held in a number of decisions that the assessee can file Form No.10 at any time during assessment proceedings and which has to be considered for granting benefit u/s 11(2) of the Act and the non filing of the same is a mere irregularity and technical lapse which needs to be condoned - we hold, that the denial of benefit of accumulation for delayed filing of Form No.10 is not as per law .- Decided in favour of assessee.

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• 2020 (12) TMI 541
  Determining the long-term capital gain chargeable to tax in the hands of the assessee - trasfer of land consequent to development agreement - HELD THAT:- As observed that the assessee herself had declared long-term capital loss in her return of income for the year under consideration as arising as a result of the execution of the development agreement with M/s. Radiant Nirman Pvt. Limited on 16.12.2015 and even during the course of assessment proceedings, no such case was made out by the assessee that there being no transfer of her land as a result of the said development agreement within the meaning of section 2(47)(v) of the Act, there was no capital gain arising from the said transaction, which was chargeable to tax in her hands for the year under consideration. It appears that this claim was made by the assessee for the first time during the course of appellate proceedings before the ld. CIT(Appeals) but the same was not specifically considered by the ld. CIT(Appeals), inasmuch as, there was no finding or decision whatsoever given by the ld. CIT(Appeals) on this aspect of the matter in his impugned order. As rightly contended by the ld. D.R., this issue thus has not been considered and decided either by the Assessing Officer or by the ld. CIT(Appeals) on merit by examining/verifying the terms and conditions of the relevant development agreement. Since the same goes to the root of the matter, we consider it fair and proper and in the interest of justice to send it back to the Assessing Officer for such examination/verification. The impugned order of the ld. CIT(Appeals) is accordingly set aside and this matter is restored to the file of the Assessing Officer for deciding the same on merit as relying on INFINITY INFOTECH PARKS LIMITED [ 2018 (9) TMI 111 - CALCUTTA HIGH COURT] Valuation report prepared by the DVO u/s 55A - Assessing Officer is accordingly directed to re-compute the long-term capital gain chargeable to tax in the hands of the assessee after taking into consideration the valuation report of the DVO dated 20.05.2019 and after giving the assessee proper and sufficient opportunity of being heard.

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• 2020 (12) TMI 529
  Depreciation on valuation of investment portfolio - tribunal allowed claim by treating the investments held by the assessee bank as stock-in-trade once the RBI Master Circular read with CBDT Circular No.665 came into force - Exemption u/s 14A - HELD THAT:- Substantial questions of law involved in this appeal have been answered in favour of the assessee by division bench decision of this court in KARANTAKA BANK LTD. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT ] decision of the Supreme Court in MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT ] and judgment [ 2020 (1) TMI 1141 - KARNATAKA HIGH COURT ] respectively. The aforesaid assertion made by learned counsel for the assessee could not be disputed by learned counsel for the revenue. For the reasons assigned in the aforesaid judgments, the first and second substantial questions of law are answered against the revenue and in favour of the assessee. TDS u/s 194H - payment made towards the service charges rendered by M/s. NFS - HELD THAT:- In case the credit card issued by the assessee was used on the swiping machine of another bank, the customer whose credit card was used got access to internet gateway of acquiring bank resulting in realization of the payment. Subsequently, the acquiring bank realize and recover the payment from the bank, which had issued the credit card. The relationship between the assessee and any other bank is not of an agency but that of two independent basis on principal- principal basis. Even assuming that the transaction was being routed to National Financial Switch and Cash Tree, then also it is pertinent to mention here that the same is a consortium of banks and no commission or brokerage is paid to it. It does not act as an agent for collecting charges. Therefore, we concur with the view taken by the High court of Delhi in JDS APPARELS [ 2014 (11) TMI 732 - DELHI HIGH COURT ] and hold that provisions of Section 194H of the Act are not attracted to the fact situation of the case. - Decided in favour of assessee.

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• Customs

• 2020 (12) TMI 540
  Imposition of penalties - violation of Principles of natural justice - invocation of of Section 112 (a) and Section 112(b) of the Customs Act, 1962 simultaneously - denial of cross-examination of the panchas and other witnesses - HELD THAT:- The tax appeal under Section 130 of the Customs Act, 1962 and Section 35 G of the Central Excise Act, 1944 is ordered to be admitted on the substantial questions of law. Issue Notice to the respondent.

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• 2020 (12) TMI 539
  Imposition of penalties - violation of Principles of natural justice - invocation of of Section 112 (a) and Section 112(b) of the Customs Act, 1962 simultaneously - denial of cross-examination of the panchas and other witnesses - HELD THAT:- The tax appeal under Section 130 of the Customs Act, 1962 and Section 35 G of the Central Excise Act, 1944 is ordered to be admitted on the substantial questions of law. Issue Notice to the respondent.

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• 2020 (12) TMI 538
  Imposition of penalties - violation of Principles of natural justice - invocation of of Section 112 (a) and Section 112(b) of the Customs Act, 1962 simultaneously - denial of cross-examination of the panchas and other witnesses - HELD THAT:- The tax appeal under Section 130 of the Customs Act, 1962 and Section 35 G of the Central Excise Act, 1944 is ordered to be admitted on the substantial questions of law. Issue Notice to the respondent.

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• 2020 (12) TMI 537
  Anti Dumping Duty - legality and validity of the disclosure statement issued by the respondent - imports of a product called pyrazolone - HELD THAT:- We have to our advantage the benefit of the appearance of Mr. Devang Vyas, the learned Additional Solicitor General of India on an advance copy served to him by the writ applicant. According to Mr. Vyas, the Designated Authority has convened a meeting today i.e. on 09.12.2020 at 3 o clock to discuss the matter further. Mr.Vyas would submit that the writ applicant should appear today before the Designated Authority at 3 o clock and point out what type of information or other details, the writ applicant requires, so as to represent its case in a better and effective manner. The writ applicant or any authorized representative of the writ applicant shall appear today before the Designated Authority at 3 o clock and point out what type of further information or details are required, so that on the basis of the same, the writ applicant can effectively represent its case on the issue in question. The Designated Authority may hear the writ applicant on this aspect and make an endevour to resolve this controversy by furnishing the necessary details, if otherwise, there is no legal impediment coming in the way of the Designated Authority in furnishing such information. Prima facie, we are of the view that, the issue raised in this writ application does not require any serious adjudication. The issue can be resolved amicably. This matter adjourned upto the next week. Post the matter on 16.12.2020 .

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• 2020 (12) TMI 536
  Provisional Release of seized goods on the condition of furnishing of bond and cash security of 25% of the seized value - Betel Nuts - Foreign Origin goods or not - HELD THAT:- The seizure of betel nuts has taken place only on a belief that the same appears to be of foreign origin. On being questioned, Shri Jain, learned Authorised Representative has agreed that there is no direct evidence of betel nuts being of foreign origin. In such a scenario, the allegation of the nuts being smuggled cannot, prima facie, be upheld. There are umpteen number of cases laying down that inasmuch as the betel nuts are also indigenously grown items and the foreign origin and smuggled nature of the same cannot be sustained on mere visual examination. It may not be out of place to mention here that betel nuts are not notified items in terms of section 123 of Customs Act and as such, the onus to prove that the same are of foreign origin and their smuggled character lies heavily on the Revenue - In the absence of the same, the provisional release subject to heavy condition of deposit of 25% of the seized value cannot be held to be justified. Revenue is directed to release the betel nuts as soon as possible as the same are perishable item, and preferably within a period of two months from today - petition allowed.

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• Corporate Laws

• 2020 (12) TMI 535
  Winding up of Appellant Company - Transfer of winding up petitions from the Company Court to be tried by the NCLT - HELD THAT:- The Code began tentatively by leaving proceedings relating to winding up of companies to be transferred to NCLT at a stage as may be prescribed by the Central Government - This was done by the Transfer Rules, 2016 (supra) which came into force with effect from 15.12.2016. Rules 5 and 6 referred to three types of proceedings. Only those proceedings which are at the stage of pre-service of notice of the winding up petition stand compulsorily transferred to the NCLT. The result therefore was that post notice and pre admission of winding up petitions, parallel proceedings would continue under both statutes, leading to a most unsatisfactory state of affairs. This led to the introduction of the 5th proviso to section 434(1)(c) which, as has been correctly pointed out in M/S KALEDONIA JUTE AND FIBRES PVT. LTD. VERSUS M/S AXIS NIRMAN AND INDUSTRIES LTD. ORS. [ 2020 (11) TMI 587 - SUPREME COURT] , is not restricted to any particular stage of a winding up proceeding - Therefore, what follows as a matter of law is that even post admission of a winding up petition, and after the appointment of a Company Liquidator to take over the assets of a company sought to be wound up, discretion is vested in the Company Court to transfer such petition to the NCLT. The question that arises before us in this case is how is such discretion to be exercised? The Companies Act, 2013 deals with winding up of companies in a separate chapter, being Chapter XX. When a petition to wind up a company is presented before the Tribunal, the Tribunal is given the power under Section 273 to dismiss it; to make any interim order as it thinks fit; to appoint a provisional liquidator of the company till the making of a winding up order; to make an order for the winding up of the company; or to pass any other order as it thinks fit [section 273(1)] - The Companies Act, 2013 deals with winding up of companies in a separate chapter, being Chapter XX. When a petition to wind up a company is presented before the Tribunal, the Tribunal is given the power under Section 273 to dismiss it; to make any interim order as it thinks fit; to appoint a provisional liquidator of the company till the making of a winding up order; to make an order for the winding up of the company; or to pass any other order as it thinks fit [section 273(1)]. Under section 292, subject to the provisions of the Companies Act, 2013, the Company Liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by the resolution of the creditors or contributories at any general meeting [section 292(1)]. Thus, several stages are contemplated, with the Tribunal retaining the power to control the proceedings in a winding up petition even after it is admitted. Thus, in a winding up proceeding where the petition has not been served in terms of Rule 26 of the Companies (Court) Rules, 1959 at a pre- admission stage, given the beneficial result of the application of the Code, such winding up proceeding is compulsorily transferable to the NCLT to be resolved under the Code. Even post issue of notice and pre admission, the same result would ensue. However, post admission of a winding up petition and after the assets of the company sought to be wound up become in custodia legis and are taken over by the Company Liquidator, section 290 of the Companies Act, 2013 would indicate that the Company Liquidator may carry on the business of the company, so far as may be necessary, for the beneficial winding up of the company, and may even sell the company as a going concern - It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case. Despite the fact that the liquidator has taken possession and control of the registered office of the appellant company and its factory premises, records and books, no irreversible steps towards winding up of the appellant company have otherwise taken place. This being so, the Company Court has correctly exercised the discretion vested in it by the 5 th proviso to section 434(1)(c) - Appeal dismissed.

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• Service Tax

• 2020 (12) TMI 534
  Business Auxiliary Services - service in relation to promotion or marketing or sale of goods produced or provided by or belonging to the client or any service in relation to promotion or marketing of service provided by the client - taxable service or not - SCN mentions that the appellant had rendered his celebrity image as a brand ambassador for promotion and marketing/sale of various products, for which he had received remuneration as per the agreements - Extended period of limitation - penalty. Whether the Brand Endorsement fees received by the appellant was for providing services relating to promotion or marketing or sale of goods produced or provided by or belonging to the client, so as to make the service taxable under BAS or was for promotion or marketing of a brand of goods for it to be taxable under section 65(105)(zzzzq) of the Finance Act? - HELD THAT:- W hen a product is advertised by using a celebrity, the intention is to create an impression in the minds of customers or users that the product and services of the brand have the level of excellence comparable to that of the celebrity. It is only promotion or marketing or sale of goods produced, provided or belonging to a client and promotion of marketing of services provided by the client that are covered under BAS and they would continue to be covered under BAS. The Instructions further notes that many important companies were associated with a range of activities including production, marketing, sale of goods, provision of services, holding of events, undertaking social activities and if the brand name/house mark is promoted by a celebrity, without reference to any specific product or services, the service would not be classified under BAS, but would be classifiable under the newly added service under section 65(105)(zzzzq) of the Finance Act - there is no manner of doubt that the activity carried out by the appellant would be classifiable under the new taxable service contemplated under section 65(105((zzzzq) of the Finance Act. This issue has been settled by the Bombay High Court in INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2009 (3) TMI 29 - BOMBAY HIGH COURT] . The High Court held that introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said service - thus, the activity carried out by the appellant could not have been subjected to levy of service tax under BAS prior to July 1, 2010 and would only be taxable w.e.f July 1, 2010 under section 65(105)(zzzzq) of the Finance Act. Whether anchoring in TV show was a promotional activity for the promotion of service which the TV channel provided so as to make the service taxable under BAS? - HELD THAT:- This contention of learned counsel for the appellant deserves to be accepted for the simple reason that the show cause notice does not make any mention of this demand. It has been held by the Supreme Court in PRECISION RUBBER INDUSTRIES (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2016 (4) TMI 841 - SUPREME COURT] that a show cause notice is the foundation in the matter of levy and recovery of duty. Thus, if the show cause notice has not called upon the appellant to submit any reply on this aspect of the demand, the said demand could not have been confirmed. Whether the fees received by the appellant for writing articles was a promotional activity of the services provided by the Organizations with whom the appellant was under a contract, so as to make the service taxable under BAS? - HELD THAT:- The contention of leaned counsel for the appellant is that the demand could not have been confirmed in the absence of any charge relating to this aspect in the show cause notice - This contention of the learned counsel for the appellant also deserves to be accepted. Whether the appellant, apart from playing for KKR, also promoted logos/brands/marks of franchisee/sponsors so as to make the services taxable under BSS? - HELD THAT:- The Commissioner has, in view of the Instructions dated July 26, 2010 issued by CBEC assumed that the amount received was a composite fee and the entire amount was leviable to service tax in terms of the Instructions dated July 26, 2010. The view taken by the Commissioner is not correct. In the first instance, as noted above, the appellant had received the fees for playing cricket only and even otherwise, it is a settled principle of law that if no machinery exists to exclude non-taxable service, a composite contract is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. Whether the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could have been invoked in the facts of the present case and whether penalty under section 78 of the Finance Act could have been imposed? - HELD THAT:- The show cause notice was issued to the appellant on September 26, 2011 in regard to the demand covering the period from May 1, 2006 to June 30, 2010 by invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act as the limitation contemplated under section 73(1) Finance Act was one year from the relevant date. The allegation made in the show cause notice regarding the applicability of the extended period of time limit - The Commissioner has not dealt with the issue of limitation and only a statement has been made, while dealing with the imposition of penalty under section 78 of the Finance Act, that the issue of limitation was dealt earlier. It would be seen from a perusal of section 73(1) of the Finance Act read with its proviso and section 78 of the Finance Act that the ingredients for applicability of the provision, namely fraud, collusion, wilful mis-statement, suppression of facts or contravention of any other provisions of the Act are similar - It was imperative for the Commissioner to have recorded a finding on the issue of limitation, for it is only where any service tax has not been paid that the Central Excise Officer can within one year from the relevant date serve notice on the person chargeable with the service tax which has not been paid. The proviso to section 73(1) of the Finance Act, however, permits the notice to be served within five years but the conditions stipulated therein have to be satisfied - even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is wilful with an intent to evade payment of service tax. Whether the appellant is entitled to interest on the amount deposited from the date of deposit to the date the amount was transferred to the account of the Registrar General of the Calcutta High Court? - HELD THAT:- As the appeal filed by the appellant is being allowed and the demand confirmed by the Commissioner is being set aside, there is no reason why the appellant should not be granted interest on the amount of (Rs. 1,51,66,500 and 50,00,000) deposited with the Government from the date of deposit of the amount upto the date of transfer of the said amount to the Registrar General of the High Court. The impugned order dated November 12, 2012 passed by the Commissioner is set aside and the appeal is allowed - The appellant shall also be entitled to interest on the amount of Rs. 1,51,66,500/- and Rs. 50,00,000/- from the date of deposit of the amount with the Government upto the date the amount was transferred to the Registrar General of the Calcutta High Court at the rate of ten percent per annum.

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• 2020 (12) TMI 533
  Demand of Service Tax - services rendered to foreign companies - export of services or not - appellant did not discharge service tax on the commission received in convertible foreign currency as it believed that the services rendered by it to foreign companies amounted to export of service under the Export of Service Rules, 2005 - case of Revenue is that the services rendered by the appellant may not tantamount to export of service under the 2005 Rules for the reason that though the services were rendered to foreign companies, but the same were provided and used in India - Circulars dated February 24, 2009 and May 13, 2011 - HELD THAT:- The appellant has stated that it procured orders on behalf of such foreign companies in India and whenever any Indian company issued a tender, the appellant sent it to the foreign companies and also bid on behalf of the foreign companies under their instructions. If the bid is accepted, the appellant procures orders from the Indian company on behalf of the foreign companies. The purchase orders are raised in the name of foreign companies. The foreign companies thereafter export the goods to the customers in India and the invoices are raised directly on the customers. The appellant thereafter raises an invoice for its commission on the foreign companies and receives the commission amount in convertible foreign currency. It is, therefore, clear that the appellant supports such foreign companies to procure orders in India. Such service is provided from India and used outside India. The service rendered by the appellant would, therefore, satisfy the twin conditions set out in rule 3(2) of the 2005 Rules as has also been clarified by the Circular dated February 24, 2009. In M/S GAP INTERNATIONAL SOURCING (INDIA) PVT. LTD. VERSUS CST, DELHI [ 2014 (3) TMI 696 - CESTAT NEW DELHI] , the service provided by the appellant therein was in relation to procurement of goods from India and for this purpose, the appellant conducted survey of the manufacturers of various products required by GAP, USA and recommended vendors who could supply the goods. The appellant also conducted inspection of the export consignments and issued the inspection certificates. It was, therefore, not in dispute that the services provided by the appellant were BAS. The dispute, however, was whether the services qualified as export in terms of the 2005 Rules and, therefore, not taxable in India. It is in this context that the Tribunal held that the services provided by the appellant were obviously meant for and were used by GAP, USA for their business and, therefore, these services would be treated as exported out of India. The contention of the Department that the condition of used outside India were not satisfied was not accepted by the Tribunal - The Circular dated February 27, 2010 was found to be contrary to the provisions of rule 3(1) of the 2005 Rules. The only requirement after the amendment in rule 3 (2) of the 2005 Rules is that the service recipient should be situated outside India and consideration should be received in foreign currency. Both the conditions stand satisfied. Even otherwise, for the period prior to February 27, 2010, it has been held that no service tax could be levied. Thus, it was immaterial as to whether the appellant was able to substantiate the quantum of services provided after February 27, 2010 and the consideration received thereon. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (12) TMI 531
  Rejection of Declaration in form SVLDRS-1 - rejection on the ground that the appeal filed by the writ applicant is pending with the Textile Committee (Cess) Tribunal at Mumbai and such tribunal is not included in the definition of Appellate Forums - Appellate Forum for the purpose of Section 121(f) of the SVLDR Scheme - HELD THAT:- Mr. Dave, the learned counsel appearing for the writ applicant has invited the attention of this Court first to the definition to the term Appellate Forum as defined under Section 121 (f) of the Scheme, 2019 - thereafter, Mr. Dave invited the attention of this Court to Section 122, which prescribes as to which particular enactment the scheme would be applicable and in the last, he invited the attention to the provisions of Section 123 of the Scheme, which defines or rather explains the term tax dues . The argument of Mr. Dave is that Section 123(a) of the Scheme only talks about the Appellate Forum. It does not specify about any particular forum. Let Notice be issued to the respondents, returnable on 20.01.2021 .

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• CST, VAT & Sales Tax

• 2020 (12) TMI 530
  Attachment of petitioner Bank Account - clerical and arithmetical mistake or not - whether the application/representation made by the petitioner, to the effect that the demand made by the assessing authority is not enforceable as the unit of the petitioner is in economic zone and the alleged illegality in the order falls within the ambit of words clerical and arithmetical mistake as in Rule 60 of A.P. VAT Rules? HELD THAT:- From Rule 60 of A.P. VAT Rules, it is clear that an application seeking correction of errors can be made within four years from the date of the order, provided there is a clerical or arithmetical error in the order. Therefore, the objection raised by the respondent that the petitioner has come to the court at a belated stage may not be correct. But, the issue is whether there was a clerical or arithmetical error in the order dated 20.3.2018. The material placed before the court would show that the petitioner herein never challenged the assessment order wherein the petitioner was demanded to pay a sum of Rs. 2,34,369/- as CST for the assessment year 2013-2014. The said order has become final. For reasons best known, two years later i.e., in the month of October, 2020, the petitioner made a request for the relief referred to earlier. Definitely, the reasons for alteration of the relief or modification of the relief as urged in the representation cannot be called as a clerical or arithmetical error. As seen from his representation, the plea of the petitioner is that the demand made is not executable against the petitioner. If that is so, the remedy for the petitioner would be to challenge the order passed by the authority in the year 2018. But, without doing so, allowed the order to attain finality and thereafter, has come forward with a request in the form of a representation indirectly seeking reopening of the assessment. If the said representation is allowed to be adjudicated, the same would amount to reviewing of the assessment by the very same authority, who has passed the assessment order or reopening of the assessment. In the absence of any provision for reviewing the order, we hold that there is no error, falling within the parameters of Rule 60 of A.P. VAT Rules, warranting interference under Article 226 of the Constitution of India. Petition dismissed.

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• Indian Laws

• 2020 (12) TMI 532
  Smuggling - seizure of contraband - disposal of drugs and psychotropic substances - Section 52 A (2) of NDPS Act - Notification No. G.S.R. 38(E) dated 16.01.2015 - HELD THAT:- Notification No. G.S.R. 38(E) dated 16.01.2015, in suppression of the earlier Notification G.S.R. 339(E) dated 10.05.2007 inter-alia provides that officer in charge of the police station shall within 30 days from the date of the receipt of chemical analysis report of drugs, psychotropic substances or controlled substances apply to any Magistrate under Section 52(A)(2) in terms of Annexure 2 to the said notification. Sub Para (2) of Para 4 that after the Magistrate allows the application under sub-section (3) of Section 52A, the officer mentioned in sub-para (1) of Para 4 shall preserve the certified inventory, photographs and samples drawn in the presence of Magistrate as primary evidence for the case and submit details of seized items to the Chairman of the Drugs Disposal Committee for a decision by the Committee in the question of Disposal. As per Section 52A (2), only the officer in-charge of a police station or the officer who is empowered under Section 53 of NDPS Act can dispose of drugs under Section 52 A of NDPS Act. Insp Manoj Narwal is neither an officer in charge of Police Station / SHO nor he is empowered under Section 53 of the NDPS Act. Moreover, the said Insp. is not an officer who prepared the alleged list of the recovered items, list of recovered documents, panchnama, or draws the sample, or seized the alleged drugs - It is pertinent to mention here that as per para 4 of the Notification No. G.S.R. 38(E) dated 16.01.2015, in suppression of the earlier Notification G.S.R. 339(E) dated 10.05.2007 inter-alia provides that officer in charge of the police station shall within 30 days from the date of the receipt of chemical analysis report of drugs, psychotropic substances or controlled substances apply to any Magistrate under Section 52(A)(2) in terms of Annexure 2 to the said notification. As per the prosecution case, Insp. Praveen Dhull prepared a list of recovered articles, documents, Panchnama, etc. but not by Insp.Manoj Narawal, thus, the said Manoj Narawal is neither officer in charge of the police station nor empowered under section 53A of NDPS Act who can dispose of the drugs or nor move an application before the Magistrate for disposal of drugs as defined under sub-section 2 of section 52A of NDPS Act. Moreover, the said application was moved contrary to the notification dated 10.05.2007 and 16.01.2015 of Ministry of Finance (Department of Revenue), Government of India. The orders passed by learned Magistrate and learned ASJ/Special Judge, NDPS, New Delhi are bad in law, thus, deserves to be set aside - petition allowed.

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