Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 18, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST - States
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53/2018-State Tax - dated
12-12-2019
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Delhi SGST
Delhi Goods and Services Tax (Eleventh Amendment) Rules, 2018.
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Removal of Difficulty Order No. 08/2019-State Tax - dated
10-12-2019
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Goa SGST
Goa Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019.
SEZ
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S.O. 4451(E) - dated
9-12-2019
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SEZ
Central Government notifies an additional area of 1.6596 hectares, thereby making the total area of the Special Economic Zone as 5.1255 hectares, at Survey No. 129 (P), 130 (P), 131 (P) Near Rajiv Gandhi Infotech Park, Hinjewadi, Phase-I, Pune, in the State of Maharashtra
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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LTCG - Transfer of a capital asset u/s 2(47) - Power of Attorney (POA) for development of land - compromise deed - as per the deed, various amounts had to be paid by the Builder to the owner so that a complete extinguishment of the owner’s rights in the property would then take place - Since payment and transfer is complete, additions confirmed.
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Bogus purchases - AO disallowed the web advertisement expenses and the depreciation claimed by the respondent assessee in respect of software purchase - proof of actual use of software - reliance on the statement of accommodation entry provider - Assessee not able to prove its case - Additions confirmed.
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Reopening of assessment - Capital gain - transfer u/s 2(47) - the assessee were inconsistent in their stand at different point of time - the decisions relied on learned counsel for the appealant can be of no assistance to the case of the assessee
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Revision u/s 263 - assessment order passed u/s 153A r.w.s 143(3) - no any incriminating material unearthed by search team therefore Assessing Officer’s order is not erroneous.
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Exemption under Section 54F - whether the property acquired by the assessee by means of perpetual lease for unlimited period would amount to purchase? - for all practical purposes, the acquisition of property by perpetual lease exceeding the period of twelve years, has to be construed as purchase within the meaning of Section 54F.
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Addition u/s 68 - Unexplained cash credit - it could safely be concluded that the assessee was successful in proving the identity of the investors, creditworthiness of the entities and genuineness of the transactions - Additions deleted.
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Disallowance u/s 40(a)(ia) - non- deduction of TDS on provision for expenses - no bills and invoices were raised by the creditors and no liability of payment arose - the assessee is under no obligation to make payment and no TDS is deducted - Additions deleted.
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Reassessment proceedings u/s.147 - The entry provider entries did not have any genuine business activity - AO has duly applied his mind and verified the information from the audited accounts of the assessee - Reopening of case sustained.
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MAT - Addition made by the AO in part u/s 14A r.w. Rule 8D while determining the book profit u/s.115JB - our action for restoring back the issue to the file of AO would unnecessarily cause further litigation - disallowance on an ad-hoc basis @ 1 % of the exempted income to be made.
Customs
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Rejection of declared value - misdeclaration of goods - Levy of ADD - import of H.R Stainless Steel Sheets - Since Appellants had waived of the requirement of show cause notice they could not in subsequent proceedings complain about the non supply of the relied upon/ relevant documents
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Levy of penalty - Benefit of CVD exemption - Since appellants have clearly and correctly described the imported goods as part of water filter, the error in claiming the benefit of wrong exemption notification cannot be act of deliberate misdeclaration - No penalty u/s 114A.
IBC
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Non-payment of arrears dues of GST for the period prior to commencement of CIRP - net GST liability from the date of commencement of CIRP - Revenue directed to allow the Corporate Debtor to have access to its GST Net Portal Account, permit the applicant to file GST Returns of the Corporate Debtor generated after commencement of CIRP without insisting upon payment of past dues of GST
Service Tax
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Nature of activity - service or sale - "lease of 999 years" is equivalent to "sale" or not - renting of immovable property service or not - the lump sum payment becomes liable to tax under Finance Act, 1994 in addition to the periodic payments.
Central Excise
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Demand of duty without proper classification of goods in dispute - in the SCN there is no allegation as to why the classification claimed by the appellant viz 2709 should not be changed. And it also does not suggest why the goods should be classified under any particular heading. - In any case, the burden of proving of classification lies on Revenue. - Demand set aside.
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Method of Valuation - Job-work - clearance of ‘set-top-boxes’ - The definition of ‘job-worker’, as incorporated in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 would not cover the transactions, as well as the activities, that characteristic occur in the present dispute
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lassification of goods - MV Royale Floatal - The fine line of distinction between opulence and pleasurable degeneracy may pose a dilemma for the moralist but, in the absence of such considerations in ascertainment of rate of duty in the First Schedule to Central Excise Tariff Act, 1985, insistence upon classification on perception or usage would be tantamount to insinuating personal values which, while permissible in Legislative enactments, is to be eschewed in tax enforcement - has been correctly assessed under CTH 8901.
VAT
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Priority of the charge - statutory charge in favour of the Sales Tax Department - if any Central Statute creates priority of a charge in favour of a secured creditor, the same will rank above the charge in favour of a State for a tax due under the Value Added Tax of the State.
Case Laws:
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GST
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2019 (12) TMI 706
Time limit for availing Input Tax Credit (ITC) - whether GSTR-3B is a return u/s 39(1) of Central GST Act or State GST Act - HELD THAT:- Issue notice on the prayer for interim relief, application for condonation of delay as well as on the Special Leave Petition.
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2019 (12) TMI 705
Permission for withdrawal of petition - Jurisdiction of CGST-Delhi South Commissionerate - HELD THAT:- The issue of jurisdiction has been sorted out on it being decided that the CGST-Delhi South Commissionerate would be the one investigating the cases against the petitioner and that the Audit Commissionerate shall not proceed in the matter any further, Mr. Bhatia states that the petitioner seeks leave to withdraw the present petition with liberty to raise all its pleas before the authorities. Petition dismissed as withdrawn.
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2019 (12) TMI 704
Updation of Cash ledger - the electronic cash ledger has not been updated and is still showing the cash balance as on 16.11.2019 - HELD THAT:- The petitioner is directed to place on record the screenshots of the electronic cash ledger within three days with advance copy to Mr. Bansal. If the grievance of the petitioner is found to be justified, Mr. Bansal shall follow-up the matter with the respondents to ensure that the same is rectified positively before the next date. List on 17.12.2019.
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2019 (12) TMI 703
Profiteering - purchase of a flat in the Respondent s project Fusion Homes situated at off GH-05A, Greater Noida (West), Uttar Pradesh - it is alleged that Respondent had increased the price of the flat after introduction of GST w.e.f. 01.07.2017 and had not passed on the benefit of input tax credit by way of commensurate reduction in the price - contravention of section 171 of CGST Act - penalty. HELD THAT:- The provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of ₹ 4,79,04,342/- which includes GST on the base profiteering amount of ₹ 4,27,71,733/- from all the flat buyers. This amount is inclusive of ₹ 2,36,428/- (including GST on the base amount of ₹ 2,11,096/-) which is the profiteered amount in respect of the Applicant No. 1. All these buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of ₹ 4,79,04,342/- along with interest @18% per annum to these flat buyers from the dates from which the above amount was collected by him from these buyers till the payment is made, within a period of 3 months from the date of passing of this order. Thus, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Since the present investigation is only up to 30.09.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats and the shops being constructed by him in his Project Fusion Homes in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty - Accordingly, a SCN be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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Income Tax
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2019 (12) TMI 702
LTCG - Transfer of a capital asset within the meaning of Section 2(47) - Power of Attorney (POA) for development of land - compromise deed - as per the deed, various amounts had to be paid by the Builder to the owner so that a complete extinguishment of the owner s rights in the property would then take place - HELD THAT:- Section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. On a reading of the agreement to sell dated 15.05.1998, what is clear is that both the parties are entitled to specific performance. (See Clause 14). Clause 16 is crucial, and the expression used in Clause 16 is that the party of the first part hereby gives permission to the party of the second part to start construction on the land. Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be possession within the meaning of Section 53A, which is a legal concept, and which denotes control over the land and not actual physical occupation of the land. This being the case, Section 53A of the T.P. Act cannot possibly be attracted to the facts of this case for this reason alone. We now turn to the argument of the learned senior counsel appearing on behalf of the assessee based on Section 2(47)(vi). it is clear that the expression enabling the enjoyment of must take colour from the earlier expression transferring , so that it can be stated on the facts of a case, that a de facto transfer of immovable property has, in fact, taken place making it clear that the de facto owner s rights stand extinguished. It is clear that as on the date of the agreement to sell, the owner s rights were completely intact both as to ownership and to possession even de facto, so that this Section equally, cannot be said to be attracted. Coming to the third argument of the learned senior counsel on behalf of the appellant, what has to be seen is the compromise deed and as to which pigeonhole such deed can possibly be said to fall under Section 2(47). A perusal of the compromise deed shows that the agreement to sell and the Power of Attorney are confirmed, and a sum of ₹ 50 lakhs is reduced from the total consideration of ₹ 6.10 crores. Clause 3 of the said compromise deed confirms that the party of the first part, this is the appellant, has received a sum of ₹ 4,68,25,644/- out of the agreed sale consideration. Clause 4 records that the balance ₹ 1.05 crores towards full and final settlement in respect of the Agreement entered into would then be paid by 7 post-dated cheques. Clause 5 then states that the last two cheques will be presented only upon due receipt of the discharge certificate from one M/s. Pioneer Homes. In this context, it is important to advert to a finding of the ITAT, which was that all the cheques mentioned in the compromise deed have, in fact, been encashed. This being the case, it is clear that the assessee s rights in the said immovable property were extinguished on the receipt of the last cheque, as also that the compromise deed could be stated to be a transaction which had the effect of transferring the immovable property in question. The pigeonhole, therefore, that would support the orders under appeal would be Section 2(47)(ii) and (vi) of the I.T. Act in the facts of the present case. Appeal dismissed.
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2019 (12) TMI 701
Difficult for the persons residing in the Jammu and Kashmir to file income tax returns u/s 139(1) - HELD THAT:- There was no appearance for the petitioner, when the matter was listed on 8th November 2019 as well. The matter was directed to be listed today. There is no appearance on behalf of the petitioner even today. From the facts noted by us on 4th November 2019, it would appear that the grievance made by the petitioner stands redressed by the respondents. In view thereof, this writ petition is rendered infructuous and is disposed of as such.
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2019 (12) TMI 700
Exemption u/s 11 - charitable activity u/s 2(15) - ITAT directing the registration to be accorded instead of reverting it back for re-examination - HELD THAT:- Tribunal found that even if this anomaly was there in accounting yet this could be easily corrected and that the provision of Section 10(23C)(iiiad) and 12AA of the Act operate in different fields as held by this Court in the case of CIT vs. Appejay Education Society [ 2015 (4) TMI 303 - PUNJAB HARYANA HIGH COURT] The Tribunal further held that the Commissioner had wrongly noticed that the no details of fee being charged have been supplied whereas all the details have been supplied. Tribunal also faulted the Commission for coming to the conclusion that the salary structure which was put in place by the respondent was not as per the salary structure of CBSE and at such low salaries good education could not be given. Tribunal correctly held that this was not the job of the Commissioner to comment on the quality of education and found that in the kind of area where the school was located, and the kind of fee it could generate, and the salaries which were paid, were proportionate. Apart from this anomaly in the accounting of the money, the Commissioner has not held that the respondent was either diverting any money or was generating any cash income (beyond that which has been prescribed in the prospectus) or any other thing which would impinge on its character as a charitable institution. No fault can be found with the findings of the Tribunal.
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2019 (12) TMI 699
Bogus purchases - AO disallowed the web advertisement expenses and the depreciation claimed by the respondent assessee in respect of software purchase - proof of actual use of software - reliance on the statement of accommodation entry provider - HELD THAT:- Addition was only made by the assessing officer on the statement of Shri SK Gupta, without affording any opportunity for cross examination. In the Present case, the assessing officer has made detailed enquiry. De hors the statement of Shri SK Gupta, assessee has failed to show that it has incurred expenditure for web advertisement and purchased the software. Further, we did not find the observation of the coordinate bench with respect to the non-availability of technology on which websites were developed, as well as the nonexistent websites of the advertisers and also the basic details called for by the AO with respect to software development lifecycle. In the present case, order of the assessing officer has clearly made further allegations and proved conclusively that the expenditure is bogus. This Court in Alpasso Industries (P) Ltd. v. Income Tax Officer [ 2018 (8) TMI 761 - DELHI HIGH COURT] rejected a similar submission of the appellant/ assessee and, while doing so, this Court reiterated the legal position as to when a finding of fact could be classified as perverse.
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2019 (12) TMI 698
Reopening of assessment - claim made u/s 10B - According to the petitioner, date of commencement of manufacture of the product was 01.04.1996 - HELD THAT:- It is to be noted at this juncture that though, the relevant provisions u/s 10B (3) prior to amendment made in the year 1999, granted the benefit of deduction for five consecutive assessment years falling within a period of eight years beginning with the Assessment Year relevant to the previous year in which the undertaking begins to manufacture, the AO has granted deduction to the petitioner for continuous nine years till the Assessment Year 2007-08. Therefore, do not think that the Revenue is justified in contending that the petitioner is entitled only for five consecutive assessment years as covered u/s 10B (3), as existed prior to 01.04.1999 and contend that the present claim made by the petitioner is based on any false information. Even otherwise, this Court has to only see that as to whether these two relevant dates referred to at Serial Nos.7 and 8, are factually incorrect, so as to derive a conclusion that the petitioner has not truly and fully disclosed the material facts. As this Court finds that there is no dispute with regard to the date of commencement of manufacture of the product namely 01.04.1996, when the petitioner has chosen to claim direction from the second year onwards, the number of consecutive years for which deduction is claimed referred to at Serial No.8 is certainly the 10th year and therefore, such statement by the petitioner at Serial No.8, cannot be termed as false statement or claim. When such being the position, find that the Assessing Officer is not justified in reopening the assessment in the absence of failure on the part of the assessee to truly and fully disclose the material fact. Reopening is barred by limitation, as the AO has not satisfied that the assessee has failed to disclose the material facts truly and fully. Accordingly, this writ petition is allowed and the impugned order is set aside.
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2019 (12) TMI 697
Reopening of assessment - Capital gain - transfer u/s 2(47) - effective date of transfer - Year of assessment - HELD THAT:- There was no effective adjudication as to what would be the effective date of transfer while deciding the correctness of the reassessment for the year 1996-97 while making protective assessment for the year 2001-02. Therefore, we fully agree with the view taken by the CIT(A) that there was no discussion on merits on the effective date of transfer. CIT(A), after elaborately considering the terms of agreement, was right in concluding that the transfer came to be actually completed during the financial year 1999-2000 and consequently, the CIT(A) was right in holding that the entire capital gains relating to 40% of the undivided share of land were subjected to tax for the assessment year 2000-01. The Tribunal re-examined the factual position and pointed out that the assessees had never admitted the capital gains on sale of 40% of undivided portion of the land, against which, consideration was held to be 60% of the constructed area. After noting that the assessee had shown the capital gains on the basis of individual sale deeds executed in favour of the nominees of the developer, it was held that it cannot be stated that the assessment order stood merged with the appellate order because the said issue was never raised by the assessee in order to be decided by the appellate authority. Assessees cannot plead a case that there has been a change of opinion and that the rules of consistency had been violated. The CIT (A) has elaborately dealt with this aspect and we concur with the view taken by the CIT(A), which was confirmed by the Tribunal. Thus, for all the above reasons, we find that the Assessing Officer has not traveled beyond the reasons, for which, the assessment was re-opened and there is no contra view of the Assessing Officer for two assessment years i.e., 1996-97 and 2000-01 as it is reiterated that at no point of time, there was discussion on the merits of the matter as to what is the actual date of transfer. Furthermore, we have also brought out the factual position to show that the assessee were inconsistent in their stand at different point of time. Thus, for the above reasons, we are of the view that the decisions relied on learned counsel for the appealant can be of no assistance to the case of the assessee . - Decided against the assessee
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2019 (12) TMI 696
Revision u/s 263 - HELD THAT:- CIT has not invoked Explanation 2 to S. 263 either in the show cause notice or in the order passed u/s. 263. Even otherwise, Explanation 2 is not applicable as assessing officer has made the inquiry and verification which ought to have been made. Further, it is submitted that the coordinate bench in the case of Narayan Tatu Rane [ 2016 (5) TMI 1162 - ITAT MUMBAI] held that Explanation cannot said to have overridden the law as interpreted by the various High Courts, where the High Courts have held that before reaching a conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue, the Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. And the Explanation 2 to section 263 was inserted from 01.06.2015 and it is not applicable retrospectively as held in the case of Santi Krupa Estate Pvt. Ltd. vs. ACIT [ 2016 (9) TMI 1341 - ITAT AHMEDABAD]. In the present case as well as the legal proposition laid down by the higher courts we are of the view that in the present case the AO had made enquiry and assessee has also placed on record all the documents as were required by the AO in respect of both the issues as now raised by the Pr.CIT. Thus, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, Pr.CIT was not correct in exercise the jurisdiction u/s 263 - We quash the assessment proceedings initiated by the Pr.CIT in the impugned order passed under section 263 and allow the appeal of the assessee. - Appeal of the assessee is allowed.
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2019 (12) TMI 695
Benefit of deduction u/s 54 - construction could not be started within the stipulated time and added the same amount in the income of the assessee on account of long term capital gain - HELD THAT:- We note that during the year under consideration the assessee has sold a residential house property having her 1/3rd share therein situated at East Patel Nagar New Delhi for ₹ 100 lacs and had a long term capital gain of ₹ 81,66,515/-. The assessee claimed the deduction u/s 54 by investing the entire sale proceeds (aggregate investment of ₹ 1,14,51,375 and details thereof as shown at page no. 39, 42 41 of the Paper Book) before the due date of filing Income Tax Return u/s. 139 of the Act for the purchase of another residential property at Green Bay Gold Village, Yamuna Expressway, Distt. Gautam Budh Nagar, UP. Construction on the said land could not be completed within the stipulated period of three years for the reasons beyond the control of the assessee i.e. Farmers agitation against Yamuna Authority related to the area in which plot was located, as seen from page 21-31 of the Paper Book and change of developer as Silverglades Pvt. Ltd. sold the project to other developer Orris Infrastructure. In such circumstances, we are of the view that benefit of deduction cannot be denied to the assessee. We hold that assessee is entitled to the exemption claimed by her and, therefore, delete the disallowance in dispute by allowing the appeal of the assessee.
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2019 (12) TMI 694
Assessment order made in the name of amalgamated company - HELD THAT:- We do not find any fault with the CIT(A) in following the decision in the case of Saraswati Industrial Syndicate Ltd [ 1990 (9) TMI 1 - SUPREME COURT ] wherein it was held that when two companies amalgamated merged into one, the transfer company loses its entity as it serious to have its business, and their respective rights are liable to be determined under the scheme of amalgamation, but the corporate entity of the transfer company ceases to exist with effect from the date of the amalgamation is made effective. In this matter the amalgamation was effective from 1/4/2011 under the order dated 17/08/2012 passed by the Hon ble Delhi High Court under section 391 (2) and 394 of the Companies Act, 1956. In this case, however, the assessee specifically brought it to the notice of the learned Assessing Officer that there was a merger of the companies, and there was a direction of the Ld. PCIT to issue notice and hear they correct the existing legal entity. However, there is failure on the part of the learned Assessing Officer to comply with the said direction inasmuch as he issued notices to the non-existent company and completed the assessment on it. - Decided against revenue.
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2019 (12) TMI 693
Addition u/s 68 - unexplained cash credit - assessee was ultimate beneficiary and has taken loan from dubious company - HELD THAT:- Impugned addition clearly is a case of Double Taxation as it has been taxed in the hands of M/s Varrenyam Securities Private Limited as well as the assessee. As stated by assessee that the addition has been finally made in the hands of M/s Verrenyam Securities Pvt. Ltd. by the AO; Ld. CIT(A) sustained the addition and ITAT has upheld the action of the Ld. CIT(A) by dismissing the appeal of the assessee and no further appeal has been filed against the order of the ITAT, therefore, it has become final. Keeping in view of the facts and circumstances of the present case, we are of the view that addition was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the grounds raised by the Revenue. The judicial decisions relied upon by the representatives of both the sides have been duly considered. In our considered view, we do not find any parity in the facts of the decisions relied upon with the peculiar facts of the case in hand . - Decided against revenue
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2019 (12) TMI 692
Disallowance of Aircraft Expenses - CIT(A) restricted the disallowance to 25% of the total aircraft expense and corresponding depreciation - HELD THAT:- We find this issue is squarely covered by the decision of the Pune Bench of the Tribunal in assessee‟s own case [ 2019 (12) TMI 627 - ITAT PUNE] wherein this disallowance has been restricted to 15%. Both the parties agreed that facts and circumstances for this relevant assessment year is absolutely similar to assessment year 2010-11 and therefore, maintaining principle of consistency, we follow our decision on this issue and for this year also, this disallowance on account of aircraft expenses and corresponding depreciation is restricted to 15%. The order of the Ld. CIT(Appeals) is therefore modified as indicated above. Thus, ground No.1 raised in appeal by the assessee is partly allowed. Disallowance of Expenses u/s.14A - HELD THAT:- AO while providing appeal effect deleted the interest disallowance based on the fact that investments were not made from borrowed funds and sufficient interest free funds were available. CIT passed the order u/s.263 of the Act against this deletion of interest. As per the instructions in the order u/s.263, the Assessing Officer passed fresh order u/s.143(3) r.w.s.263 and recomputed the disallowance u/s.14A r.w.r.8D and restricted the disallowance to ₹ 1,95,95,619/-. Therefore, the assessee filed fresh appeal against this order and the matter is still pending before the Ld. CIT(A). In view of the present scenario, this ground raised before the Tribunal becomes infructuous. Depreciation on Printers, UPS Other allied items - HELD THAT:- We observe that in assessment year 2009-10 the Co-ordinate Bench has upheld the findings of Commissioner of Income Tax (Appeals) in allowing depreciation @ 60% on UPS and other allied items. The Commissioner of Income Tax (Appeals) in assessment year under appeal has granted relief to the assessee by following its own order in assessment year 2009-10. We find no infirmity in the findings of Commissioner of Income Tax (Appeals) on this issue Disallowance u/s.40A(2) in respect of commission paid to Directors - HELD THAT:- We find that this issue was considered by the Tribunal in appeal by Revenue in assessee s case in assessment year 2009-10. The commission paid to the Directors was allowed by the Tribunal. Hence, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Addition to capital subsidy - assessee has claimed subsidy received under the aforesaid scheme as capital receipt, whereas, the Department has held the subsidy to be on revenue account - HELD THAT:- The Co-ordinate Bench of Tribunal in the case of Innovative Industries Limited Vs. DCIT [ 2017 (4) TMI 44 - ITAT PUNE] has considered the issue of subsidy received under Package Scheme of Incentive in detail. After considering catena of judgments the Tribunal held that the incentive received by the assessee under Package Scheme of Incentive, 2007 is in the form of refund of Sales Tax and is a capital receipt not liable to tax. The Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the aforesaid decision of Tribunal. Disallowance of provision for warranty - HELD THAT:- Commissioner of Income Tax (Appeals) granted relief to the assessee holding that the provision was created on scientific basis. Further, reliance was placed on the decision of Hon ble Supreme Court of India in the case of Rotork Contrals India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] and ACIT Vs. Dana India Pvt. Ltd. [ 2013 (10) TMI 1533 - ITAT PUNE] . The findings of Commissioner of Income Tax (Appeals) was accepted by the Department and were not agitated in appeal before the Tribunal - Decided against revenue
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2019 (12) TMI 691
Addition u/s 68 - Unexplained cash credit - HELD THAT:- We consider it fair and proper and in the interest of justice to give one more opportunity to the assessee-company to explain the relevant cash credit representing share capital and share premium amount in terms of section 68 by producing the concerned share subscribers along with the relevant documentary evidence for verification before the AO. D.R. has not raised any objection for sending the matter back to the Assessing Officer for verification. The impugned order passed by the CIT(Appeals) on this issue is accordingly set aside and the matter is restored to the file of the AO for deciding the same afresh after giving proper and sufficient opportunity to the assessee to support and substantiate its case by producing the concerned share subscribers along with the relevant documentary evidence for verification. Appeal of the assessee is treated as allowed for statistical purposes.
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2019 (12) TMI 690
Undisclosed income u/s.158BA - Search and seizure operations u/s. 132 - HELD THAT:- Based on the material unearthed by the Revenue during the search operations, it was found that certain expenses or deduction or allowances claimed by the assesssee was found to be false and a part of such expenses or deduction or allowances were also admitted to be sources for the expenditure unearthed from the same search operations in the cases of Mr. Mohan, Mrs Geethalakshmi, (w/o Mohan) and Sanjay Mohan (S/o Mohan). Therefore, these material fall within the scope of undisclosed income U/s.158BA viz any income based on any entry in the books of account or other documents or transactions, where such thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false . When the assessee itself admitted an undisclosed income based on part of the seized material , which had attained finality, then , it can not plead that the addition made based on the other part of the seized material, which were unearthed in the same search and seizure operations, would not fall as an undisclosed income within the scope of Section 158 BA. With regard to the genuineness of the transaction with M/s. J S Agency, as pleaded by the ld. Sr. Standing counsel, supra, the AO after due consideration of the seized material, the statements recorded at the time of search, the statement recorded from the parties subsequently and on due analysis of the additional evidence produced by the assessee has clearly recorded the reason as to why such claim cannot be accepted and how the assessee has failed to prove that the impugned payment was made to Mr.Selvam and Mr. Inbaraj. It is clear from the order of the CIT(A) that the assessee has not laid any material assailing the findings recorded by the AO and hence, the ld CIT(A) confirmed the impugned additions. Before us also, the assessee has not filed any material assailing the findings recorded by the lower authorities. Therefore, we do not find any reason to interfere with the orders of the lower authorities on the quantum. Therefore, the assessee s contention that the disallowance of expenses made by the AO cannot be treated as an assessment of an undisclosed income within the scope of Section 158 BA, is held as untenable. Thus, all the grounds of the assessee fail and therefore the assessee s appeal is dismissed.
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2019 (12) TMI 689
Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.
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2019 (12) TMI 688
Levy of penalty u/s 271AAB(1)(a)(ii) - During the course of search, the Investigation team found incriminating material in the form of a note in I-pod with regard to rate quoted by the assessee for sale of plots @₹ 4,600/- per square yard which was seized in the office and also in the residential premises of the partners / directors of the assessee firm - HELD THAT:- Though the incriminating material was found indicating sale of plots at ₹ 4,600/- per sq.yd. the assessee admitted the income @3,700/- for Sunray Village and ₹ 2,700/- for Sunray Beach Front after deducting the expenditure which was paid outside the books of accounts and the AO had accepted the admission made by the assessee and completed the assessment. From the assessment order and the penalty order, we find that the assessee had explained the manner in which the additional income was admitted stating that the plots were sold @2,700/- and ₹ 3,700/- per sq.yd and the sale consideration was recorded at the rate lesser than the sale consideration accounted in the books of accounts. No evidence was brought on record by the revenue to show that the contention of the assessee was incorrect. In fact the revenue has accepted the submissions made by the assessee and completed the assessment on the disclosure made by the assessee. Therefore, we hold that the assessee has satisfied the conditions laid down u/s 271AAB for levying penalty @10% which the Ld.CIT(A) has upheld. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue Penalty u/s 271AAB and 271F - assessee admitted the additional income of ₹ 2.00 crores for the assessment year which was accepted by the department and completed the assessment estimating the income @18% on gross contract receipts before depreciation - AR argued that the AO should have initiated penalty u/s 271(1)(c) - A.Y.2014-15 - HELD THAT:- Though in the earlier years, the assessee had admitted the additional income on the net consideration received, in the year under consideration the admission was only towards estimated profits for future period i.e. from 01.04.2013 to 31.04.2014. The AO also completed the assessment estimating the income @18% rejecting the books of accounts of the assessee company before depreciation. No material was also brought on record to support the estimation of income @18% on gross receipts. Though the AO completed the assessment on estimation of income, penalty was initiated u/s 271AAB instead of 271(1)(c). From the material gathered, submissions made by the assessee and from the records, we are of the considered view that no material was available with the department to hold that there was undisclosed income for the previous year ending 31.03.2014 till the date of search. Thus, there is no case for levying the penalty u/s 271AAB and we do not find any reason to interfere with the order of the Ld.CIT(A). Accordingly, the appeals of the revenue as well as the cross objections filed by the assessee are dismissed.
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2019 (12) TMI 687
Long term capital gains - Valuation determined by the DVO - adoption of SRO value for the purpose of capital gains - show cause notice to the assessee proposing to adopt the SRO value instead of Fair Market Value determined by the DVO for the purpose of capital gains and the assessee objected for adoption of the SRO Value due to the disadvantages in selling the property - AO rejected the objections raised by the assessee, since, the assessee did not dispute the guideline value before Stamps and Registration Authorities or in any Court of Law - HELD THAT:- Since the property in question was referred to valuation officer and the value assessed by the valuation officer is binding on the department, there is no reason to enhance the value assessed by the Valuation Officer when the Act does not permit the AO or the CIT(A) to do so. In case the CIT(A) is not convinced with the value determined by the DVO, as an extension of assessing authority, the CIT(A) ought to have referred the issue to the DVO again for reconsideration of the value. The valuation officer being expert, the CIT(A) is not allowed to tinker with the expert opinion without further reference to the DVO and in the process, the CIT(A) also has to give opportunity to the assessee to cross examine and to present his case before Departmental Valuation Officer along with the observations of the CIT(A). The entire process of examination, reexamination, reference was not conducted in the instant case. Therefore, there is no reason to not to accept the value determined by the valuation officer. Thus we are unable to sustain the order of the CIT(A) and hold that the assessing authority has no option except to accept the FMV determined by the DVO after making reference and proceed to compute capital gains by following provisions of sub section 50C(3) of the I.T.Act. Except the general remarks neither the CIT(A) nor the AO has found the specific defaults in the valuation report. Accordingly, we direct the AO to compute the capital gains adopting the value determined by the DVO in place of guideline value of Stamps and Registration Authority. The next contention raised by the assessee is to accept the sum of ₹ 4,79,00,000/- as full value of consideration. DVO has considered all the issues raised by the assessee with regard to various disadvantages and determined the fair market value as on 30.07.2009. No other evidence or material brought on record by the assessee to disturb the fair market value assessed by the DVO. Therefore, we do not find any reason to interfere with the valuation determined by the DVO and the contention of the assessee is rejected. Accordingly, appeals of the revenue are dismissed and the appeals of the assessee are partly allowed.
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2019 (12) TMI 686
Addition in respect of receipt of on-money - HELD THAT:- It is undisputed fact that the assessee has received on money to the extent of ₹ 76,20,000/-. It is not clear neither from the order of the Assessing Officer nor from order of the ld.CIT(A) that this amount is received by the assessee over and above the sale consideration and in which mode. Therefore, we are of the opinion that the Assessing Officer cannot make the entire addition, only profit has to be estimated. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to consider the details filed by the assessee and decide the case in accordance with law. Thus, this ground of appeal raised by the assessee is allowed for statistical purpose. Estimation of profit - AO estimated the profit at 20%, which the ld. CIT(A) reduced to 16% - HELD THAT:- Assessee has submitted that the assessee is a small assessee and section 44AD applies to him and therefore estimation may be made at 8%. We find that this case is covered by section 44AD, hence, estimation of profit at 8% is sufficient to meet the ends of justice. Accordingly, the estimation is scaled down to 8%. Thus, this ground of appeal raised by the assessee is partly allowed. Unexplained investment in purchase of property - HELD THAT:- assessee has pointed out from the paper book at page No. 17 wherein the advance site at BS Layout 305 sq.yds. for an amount of ₹ 56.70 lakhs clearly mentioned in the balance sheet. Keeping in view of the disclosure made by the partner Sri Kotagri Suryanarayana Murthy, in our opinion the addition cannot be survived. Accordingly, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is deleted. Thus, this ground of appeal raised by the assessee is allowed. Addition u/sec. 40A(3) as the payment or aggregate payments were made to a person in a single day in cash - HELD THAT:- The case of the assessee is that once income of the assessee is estimated, no separate addition can be made on account of expenditure incurred by the assessee. It is further submitted that the alleged cash payments were made towards various works like brick centering, mason, concrete and transportation charges against representing the persons who have received the payment on behalf of the entire team of the workers. Thus, the assessee contended that payments cannot be treated as paid to a single person. We find that the assessee has not given any proper explanation in respect of source of expenditure to the tune of ₹ 34.73 lakhs before the Assessing Officer and even before the ld. CIT(A) also. Before us also no proper explanation is given. We find that Assessing Officer is justified in making the addition. Undisclosed contract receipts - HELD THAT:- assessee filed return of income on 15/04/2017 disclosing gross receipts of ₹ 4,63,50,000/- whereas information gathered u/sec. 133(6) of the Act, it was found that assessee has executed total contract of ₹ 4,66,93,000/-, thereby there is undisclosed income of ₹ 3,43,000/- (₹ 4,66,93,000 ₹ 4,63,50,000). The same discrepancy was apprised to the assessee vide this office show cause dated 02/11/2017, but failed to submit any explanation, therefore the Assessing Officer has made the addition of ₹ 3,43,000/- in the hands of the assessee. Even before the ld.CIT(A) no explanation is given. Even before us no satisfactory explanation is offered, therefore we find no reason to interfere with the order passed by the ld.CIT(A). Thus, this ground of appeal raised by the assessee is dismissed.
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2019 (12) TMI 685
Levy penalty u/s 271(1)(c) - claim of deprecation on fall in value of investment and claim of depreciation on software - HELD THAT:- In the instant case, the assessee has maintained the accounts in terms of the RBI Regulations and he has shown it as investment. But consistently for more than two decades it has been shown as stock-in-trade and depreciation is claimed and allowed. Therefore, notwithstanding that in the balance-sheet , it is shown as investment, for the purpose of Income Tax Act, it is shown as stock-in-trade. Therefore, the value of the stocks being closely connected with the stock market, at the end of the financial year, while valuing the assets, necessarily the bank has to take into consideration the market value of the shares. If the market value is less than the cost price, in law, they are entitled to deductions and it cannot be denied by the authorities under the pretext that it is shown as investment in the balance-sheet. (emphasis supplied) . We therefore find that the issue raised in this Appeal is also squarely covered by the judgment of the Karnataka High Court in the case of Karnataka Bank Ltd. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] AMC charges AND License fee for oracle database, antivirus software etc .- HELD THAT:- It is nobody's case that assessee is dealing with computer softwares or is in the business of any related services. Rather it uses specific customized software, which is specific to its banking activities. But for the use of such software, the nature of expenditure otherwise incurred for streamlining its functions i.e. towards fee payable to the consultants for systems and employment of special professionals to carry on the tasks that the software in fact performs, would have fallen undoubtedly in the revenue stream. Taking these into account and the further circumstance that the software itself would have run its course or life span as it were, given that the earlier assessment year in question is 2008-09, we are of the opinion that the question of law framed is to be answered in favour of the assessee and against the revenue.
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2019 (12) TMI 684
Mismatch between income as per Form 26AS maintained in data base of Revenue and income offered to tax by assessee in return of income filed with the Revenue as is reflected in books of accounts - Addition made purely based on entries in Form 26A - return of income was originally processed by Revenue u/s 143(1) but later case of the assessee was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) - HELD THAT:- There could be several reasons for mismatch between income as is reflected in Form 26AS and income offered to tax in return of income filed with Revenue which could be due to recognition of income in the preceding year or in the subsequent year by the taxpayer vis-a-vis the other party owing to stage of completion of the work, different method of accounting followed by taxpayer and other party , deficiency in rendering of services /supplies which could lead to rejection of material/services rendered , credit notes /debit notes issued by one party while the same is not accounted by other party etc. The assessee on its part has tried to reconcile its income as offered in the books of accounts with Form 26AS but the said evidences which are critical evidences going to the root of the matter has been discarded by the CIT(A) at the threshold as the same were not admitted by CIT(A). No doubt, Rule 46A of the 1962 Rules give powers to Ld.CIT(A) to refuse admit additional evidences in certain circumstances as stipulated under Rule 46A but whence substantial justice is pitted against technicalities , the Courts will lean towards substantial justice. We admit the additional evidences filed by assessee before Ld.CIT(A) and restore the matter back to the file of the AO for framing fresh assessment denovo after considering entire evidences furnished by the assessee in its defense on merits in accordance with law. AO shall admit all the evidences/explanation filed by assessee in its defense and then decide the issue in denovo assessment on merits in accordance with law. Needless to say that the AO shall give proper and adequate opportunity of being heard to the assessee in the interest of principles of natural justice in accordance with law.
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2019 (12) TMI 683
Addition on account of unproved expenses - Lack of response from the creditors/purchase party - HELD THAT:- CIT(A) has considered all the aspects and dimensions of the issues including the detailed reconciliation and explanation by the assessee. CIT(A) has specifically noted that the addition can not be made for lack of response from the creditors/purchase party and more so when the assessee was called upon to explain the balance standing in the credit of a party at the last moment by providing details and books of suppliers on whom the assessee has no control. Under these facts and circumstances, we are in agreement with the conclusion of CIT(A) that disallowance is uncalled for. Accordingly, we uphold the order of CIT(A) by dismissing the ground raised by the Revenue. Addition of income representing unaccounted production - assessee is engaged in the business of production of bread for Britannia Industry Ltd. on contractual basis. The entire raw material is supplied by the Britannia Industry Ltd which go into the manufacturing processes - HELD THAT:- In this case the addition was primarily based upon the excess consumption of fuel to the extent of 24638 litters. We observe that the assessee was contract manufacturer of Britannia Industry Ltd. and was operating under the direct control and supervision of Britannia Industry Ltd. and was not allowed to do or manufactured bread for any other outside party. We also note that the excess consumption of fuel was within the standard norms as has been observed by CIT(A) by comparing the actual and standard consumption in the preceding and succeeding year and came to the conclusion that the estimation of unaccounted sale on the basis of excess consumption of fuel is wrong and against the provisions of the Act. We are quite convinced with the conclusion drawn by the Ld. CIT(A) on this issue as the AO has made addition on hypothetical basis not appreciating the facts in correct perspective. Accordingly, we are uphold the order of ld CIT(A) by dismissing the ground raised by the revenue.
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2019 (12) TMI 682
Revision u/s 263 - assessment order passed u/s 153A r.w.s 143(3) - HELD THAT:- We note that the assessee filed its return of income u/s 139(1) on 30.09.2011. The time limit for issue of scrutiny notice u/s 143(2) expired on 30.09.2012. The search was initiated in the assessee s case on 13.03.2014. Therefore, we note that at the time of search and seizure the assessment for A.Y.2011-12 was not pending. Therefore, in case of assessee, the assessment year 2011-12 is an unabated assessment. It is settled position of law that in case of unabated assessment, the addition cannot be made by AO without incrementing documents unearthed during search. In assessee`s case, during search operation, the search team did not find and incrementing material. Assessment order u/s 153A /143(3) was passed on 31.03.2016 and the ld. PCIT has issued notice u/s 263 on 08.12.2017. Therefore, we note that assessment year 2011-12 under consideration, was not pending on the date of search, hence it is an unabated proceedings. Without incriminating material in case of unabated assessment, the addition could not be made therefore, order passed by the AO is not erroneous. Since, the assessment which is not pending before the AO is an unabated proceeding and the Assessing Officer is empowered to make any addition only based on incriminating materials found/unearthed during search. This is a settled position of law and is no longer res integra. In this case, no any incriminating material unearthed by search team therefore Assessing Officer s order is not erroneous. Therefore, we are of the view that the order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue. Hence, we quash the order u/s 263 - Appeal of the assessee is allowed.
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2019 (12) TMI 681
Validity of revision order - whether the ld. Pr. CIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the case? HELD THAT:- The details of valuation of closing stock of each project has indeed been furnished by the assessee before the ld. AO during the course of assessment proceedings vide letter dated 27/06/2017, on which fact there is no dispute. We find that ld. AO had merely sought to bring to tax the notional rental income from the closing stock of un-sold flats in terms of Section 23 of the Act. Revenue was not able to bring on record any evidences that the assessment for A.Y.2014-15 were subsequently subjected to any reopening u/s 147 of the Act or revision proceedings u/s.263 of the Act. Hence, it could be safely concluded that the ld. AO while framing the assessment for the A.Y.2015-16 had merely adopted the same valuation method accepted by his predecessor for A.Y.2014-15 in assessee s own case. Hence, there cannot be any error on the part of the ld. AO in framing a possible view thereon. In any case, we would like to hold that the assessee had furnished the actual cost incurred in respect of this project which had been subsequently completed, before the ld. CIT during the revision proceedings wherein, the assessee was able to prove that the estimate made as on 31/03/2015 matched closer to the actual costs incurred in the project subsequently. There cannot be any prejudice that could be caused to the interests of the revenue also as it is merely a timing difference. Hence, it could be safely concluded that the ld. AO had duly applied his mind by accepting the valuation method adopted by the assessee in respect of Vrindavan Palms at ₹ 1500/- per sq.ft on an estimated basis as on 31/03/2015 on which there cannot be any interference and there cannot be any attribution of error on the part of the ld. AO. Hence, revision proceedings u/s.263 of the Act in respect of this project deserves to be quashed. There is no error in the order passed by the ld. AO in accepting the valuation of the assessee in respect of projects as on 31/03/2015 - the ld. CIT had erred in exercising revision jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case. Appeal of the assessee allowed.
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2019 (12) TMI 680
Validity of reopening of assessment - HELD THAT:- For assumption of jurisdiction, in the reasons so recorded by the Assessing officer, he has stated that assessee has failed to fully and truly disclose all material facts necessary for the assessment. Apparently, the Assessing officer has drawn reference to the proviso to section 147 of the Act which in our mind is not applicable in the instant case as the original return so filed by the assessee was processed u/s 143(1) and not under section 143(3) and thus, the proviso to section 147 and the condition so specified therein cannot be invoked to invoke assumption of jurisdiction u/s 147 of the Act. Basic requirement for assumption of jurisdiction u/s 147 is not satisfied in the instant case and consequent reassessment proceedings deserve to be set-aside - Appeal filed by the assessee is allowed.
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2019 (12) TMI 679
Exemption under Section 54F - whether the property acquired by the assessee by means of perpetual lease for unlimited period would amount to purchase ? - HELD THAT:- Assessee was in possession of residential house. Therefore, this Tribunal is of the considered opinion that in view of the definition found in Section 2(47)(vi) of the Act, the transaction of perpetual lease agreement by which the assessee took possession of property for unlimited period, has to be construed as purchase of property within the meaning of Section 54F of the Act. Section 269UA(2)(iii)(f) defines transfer which includes lease for a term not less than twelve years. In this case, admittedly, the lease was not for less than twelve years. Hence, for all practical purposes, the acquisition of property by perpetual lease exceeding the period of twelve years, has to be construed as purchase within the meaning of Section 54F of the Act. In view of the scheme under the provisions of the Income-tax Act, as enunciated under Section 2(47)(vi) and Section 269UA(2)(iii)(f), this Tribunal is of the considered opinion that when the assessee acquired the residential house by means of perpetual lease exceeding twelve years, it has to be construed as acquisition of property / purchase of property within the meaning of Section 54F of the Act. Therefore, the assessee is entitled for exemption under Section 54F of the Act. Hence, this Tribunal is unable to uphold the order of the Principal Commissioner passed under Section 263 of the Act. Accordingly, the impugned order of the Principal Commissioner is quashed. - Decided in favour of assessee.
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2019 (12) TMI 678
TP Adjustment - AO found that the assessee has international transaction with its Associated Enterprises (AE) exceeding limit and hence, with prior approval of the Principal CIT, the matter was referred to the Deputy Commissioner of Income-tax(TP) - Comparable selection - HELD THAT:- Companies as different with software development services (SDS) as that of assessee need to be deselected from final list. The companies who have more than 25% RPT of sales were excluded. AR submitted that the assessee has made a claim of TDS and out of total TDS the AO has not granted the total credit and prayed for direction for granting for credit of TDS. We found that the assessee has raised this ground of appeal and we direct the AO to grant TDS credit as per Form 26AS and further interest u/s 234B has to be levied as per law.
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2019 (12) TMI 677
Validity of scrutiny assessment order passed u/s 143(3) - No valid notice u/s 143(2) within the time prescribed under the provisions of law - rectification u/s 292BB - HELD THAT:- In the case on hand, the notice, as alleged by the Revenue on the basis of acknowledgement of speed post, has been issued through the speed post. The copy of the acknowledgement is placed on page 103 of the paper book. On perusal of the same, we find certain infirmities as submitted by the assessee before the learned CIT (A) which are discussed somewhere in the preceding paragraph. First of all the acknowledgement does not bear any date suggesting the issuance of the notice. Secondly, it does not contain any tracking number which is normally issued by the postal authorities. DR has not brought any corroborative evidences in support of the contention that the notice was issued within the prescribed time. In our considered view, the Revenue has failed to discharged the onus by producing sufficient documentary evidence for establishing the fact that the statutory notice under section 143(2) of the Act was issued within the prescribed time. Thus in absence of contrary evidences, we are not convinced with the finding of the authorities below. Indeed, it (acknowledgment issued by the postal department) is a vague and inchoate document. Hence, no reliance can be placed on the same. Accordingly, we hold that the assessment framed under section 143(3) of the Act without the issuance/serving of notice under section 143(2) of the Act within the time is not sustainable. Hence the ground of appeal of the assessee is allowed.
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2019 (12) TMI 676
Disallowance u/s 14A - HELD THAT:- No disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance on account of interest expenses under the provisions of section 14A read with rule 8D - HELD THAT:- Regarding the interest expenses, we note that in the identical facts and circumstances the impugned issue has been decided in favour of the assessee in his own case vide paragraph number 7 to 7.3 of this order. For the detailed discussion please refer to the relevant paragraph. Respectfully following the same we hold that there cannot be any disallowance on account of interest expenses. Regarding the disallowance of administrative expenses, we note that the AO has invoked the provisions of section 14A read with rule 8D mechanically without referring to the books of accounts of the assessee. As such the assessee has not claimed any expenditure against such exempted income. Therefore in our view there cannot be any disallowance of the expenses on account of exempted income. See RAKESH K. PATEL (HUF) VERSUS DCIT, CIRCLE-1 (2) , BARODA [ 2019 (7) TMI 1545 - ITAT AHMEDABAD] We hold that there cannot be any disallowance on account of interest and administrative expenses under the provisions of section 14A read with rule 8D - Decided in favour of assessee
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2019 (12) TMI 675
Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find that the assessee had placed on record sufficient documentary evidences to discharge the primary onus casted upon him and it was obligatory on the part of the revenue to controvert the same. However, no such material has been placed by revenue which would lead to a conclusion that assessee s unaccounted money was routed in the accounts by way of Share Application Money. The summons issued by AO u/s 131 were duly responded to by the investor entities and ledger confirmations were also filed in support of the transactions. There are no allegations of immediate cash deposits in the bank accounts of investor entities and nothing on record would suggest any cash got exchanged between the assessee and the investor entities. Therefore, on the basis of stated factual matrix, it could safely be concluded that the assessee was successful in proving the identity of the investors, creditworthiness of the entities and genuineness of the transactions. Hence the conclusions drawn by learned first appellate authority could not be faulted with and we find no reason to interfere with the same. Characterization of income - interest income - income has been held to be business income as against Income from other sources - HELD THAT:- We would concur with the submissions of Ld. AO that the same was assessable as Income from other Sources since undisputedly, the said investments were out of surplus funds and the assessee was not engaged in the business of finance and investment.Therefore, we hold that the said income was rightly brought to tax by Ld. AO as Income from other sources. Allowable business expenditure - since they were stated to be incurred for maintaining the corporate status and for the purpose of statutory compliances. The revenue has not agitated the same before us and therefore, the said conclusion would require no adjudication from our side. The Ld. AO is directed to recompute the income of the assessee in terms of this order.
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2019 (12) TMI 674
Re-opening of assessment - Addition u/s 68 - HELD THAT:- There is no report or evidence of any authority conducting spot verification, dates etc. The share applicant companies are all registered companies under the Companies Act and are having bank accounts as well as PAN nos. The assessee has raised share capital of ₹ 90 lakhs during the year and this was disclosed in the annual accounts attached with the income tax return. It is a recorded and disclosed fact. To record in the reasons that this was discovered during survey is not factually correct. A disclosed fact already on record cannot be discovered. Similarly the recording that information was received from the investigation wing is vague. No particulars are given. The director has sought for time to provide details. It is not a case of failure to prove the identity etc. Identity, creditworthiness and genuineness of a transaction cannot be proved in spot enquiry during survey. Hence as in the case of reasons recorded for re-opening for AY 2009-10 the re-opening of assessment for AY 2010-11 is also bad in law. There is no independent application of mind by the AO to the information received from the investigation wing. Suspicion cannot take place of proof or evidence. Though it is true that conclusive evidences need not be brought on record at the time of recording of reasons, there should be some verification which should lead to the formation of belief that income subject to tax has escaped assessment. Vague statement, wrong recording of facts in the reasons recorded for re-opening, render the re-assessment is bad in law.
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2019 (12) TMI 673
TDS u/s 194J - Disallowance u/s 40(a)(ia) - bank guarantee charges - HELD THAT:- There is nothing on record to show that the assessee actually sought any technical services from Bank or that the Bank actually provided any technical services to the assessee or that the aforesaid payment was made by the assessee to the Bank as fees for technical services. Thus, we are of the view that the finding of the Ld. CIT(A) that the payment was made by the assessee to the Bank on account of technical services; is without any basis and without any supporting materials. Therefore, the conclusion of Ld. CIT(A), arrived at without any basis and without any supporting materials, cannot be upheld. In view of the foregoing, and respectfully following the precedents and order of Hon ble Supreme Court in the case of CIT vs. Kotak Securities Ltd. [ 2016 (3) TMI 1026 - SUPREME COURT] we decide the disputed issue in the present appeal before us in favour of the assessee
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2019 (12) TMI 672
Disallowance of claim u/s. 36(1)(viii) - amount transferred to special reserves - AO had disallowed the same holding that activity of the assessee of extending long term finance to the dairy cooperative could not be termed as long term financ for agricultural and industrial development - HELD THAT:- Issue decided in favour of the revenue as in its own case [ 2017 (6) TMI 1146 - ITAT AHMEDABAD] as held that other conditions of section 36(1)(viii) are not complied with by the assessee. The milk produced by the assessee is not amounting to manufacture and therefore the assessee was not engaged in providing long term finance for industrial and agricultural development or development of industrial facility and again it had no capital which is necessary to compute the aggregate of the amount to be carried to special reserve account as twice the amount of the paid up share capital and of the General reserve. The assessee failed to comply with these other conditions and therefore it would not be entitled the deduction. Disallowance being grant given to Cooperative Union Federation and other Organization u/s. 36(1)(xii) alternatively allowable u/s. 28/37 - HELD THAT:- As in assessee's own case [ 2017 (6) TMI 1146 - ITAT AHMEDABAD] Tribunal had recalled the earlier order, and it was held that the grant is allowable as an expenditure under section 36(l)(xii) of the Act, and the matter was sent back to the AO for verification (j) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as only when fund are already utilised/ fund utilisation report are received. He also submitted that under similar facts, in A.Y.2004-05, 2005-2006 and 2006-2007, the Tribunal has restored back the matter to the file of the AO for readjudication. Disallowance u/s. 14A - HELD THAT:- We restrict the adhoc disallowance to ₹ 10 lacs being administrative expenditure incurred towards earning exempt income. Accordingly, the appeal of the assessee is partly allowed on this issue. Interest income of NKPDF project - HELD THAT:- In the preceding assessment years the same issue was travelled upto ITAT and the ITAT in assessment year 2003-04 and subsequent years till assessment year 2008-09 has adjudicated the issue against the assessee. We have gone through the decision of ITAT for assessment year 2008-09 [ 2017 (6) TMI 1146 - ITAT AHMEDABAD] and noticed that ITAT has held that consistently following the decision of Co-ordinate Bench for assessment year 2004-05 and subsequent years the interest income of North Kerala Dairy Project is to be considered as taxable income. Respectfully following the decision of ITAT for assessment year 2008- 09 and other preceding assessment years as cited above, we are of the view that interest income of North Kerala Dairy Project is to be considered as taxable income. Therefore, this ground of appeal of the assessee is dismissed. Disallowance being contribution made to Employees Recreation Trust by invoking provisions of section 40A(9) - HELD THAT:- It is noticed that in assessment year 2007-08 [ 2013 (8) TMI 360 - ITAT AHMEDABAD] the ITAT has adjudicated this issue against the assessee after following the decision of ITAT in the case of the assessee itself for assessment year 2003-04. Addition being provision written back - HELD THAT:- Addition made by the AO is not sustainahle for two reasons. The first reason is that when provision was made, the assessee was not liable to tax, hence, if the provision is reversed in the year of making the provision, it is not resulting into any tax liability, because the assessee was not taxable in that year, and therefore, reversal of such a liability cannot give rise to tax in the year of reversal, when it is not giving any benefit to the assessee, in the year of making the provision. The second reason is that even, if it is held that income has to be assessed in the year of making the provision, then this deduction on account of provision under section 36(l)(vii) is not allowable deduction in that year, because under this section, actual write allowable and not the provision. This is a pre-requirement of section 41(1) that where the allowance or deduction has been made in the assessment for any year, in respect of loss, expenditure or trade liability incurred by the assessee, and the same is subsequently ceased or has been remitted, then there is income under section 41(1) of the Act. Since in the present case, no deduction has been allowed to the assessee, in the year of making the provision, and it cannot be allowed because provision is not allowable under section 36(1)(vii), write back of such provision cannot give rise to an income under section 41(1)
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2019 (12) TMI 671
Assessment u/s 153A - addition in respect of the loan advanced to Smt. Naragoni Radha - HELD THAT:- AO has made the addition on the ground that pro-notes as well as receipts of the amount found in the premises of the assessee by rejecting the submission of the assessee that he has not advanced any amount to Smt. Naragoni Radha. As per section 292C of the IT Act, any document is found in the possession of the assessee, he has to explain that it is not belonging to him. In this case, the assessee denied that he has not advanced the amount, but the documentary evidence by way of promissory notes and receipts from the borrower shows that the assessee has advanced the amount. That part, nobody signs a promissory note without receiving the money. In view of these observations, we are of the opinion that assessee has failed to discharge burden cast upon him to establish that he has not advanced amount to Smt. Naragoni Radha. No infirmity in the order of the CIT(A) in confirming the addition made by the AO and accordingly, upholding the order of CIT(A), we dismiss the ground raised by the assessee on this issue. Unexplained investment - HELD THAT:- We find that the assessee himself has admitted by filing an affidavit that he has advanced an amount of ₹ 5 lakhs to Shri K. Naganatham, but, we do not know what is the reason for denial of the same. Before the AO, CIT(A) and even before us, the assessee failed to explain the source for advancing the amount of ₹ 5 lakhs, hence, the assessee failed to discharge the burden cast upon him to prove that he has not advanced the amount. We find no infirmity in the order of the CIT(A) in confirming the addition made by the AO, therefore, upholding the order of CIT(A) we dismiss the ground raised by the assessee on this issue. Unexplained investment in jewellery - We are of the view that CIT(A) has reasonably held that 500 grams of gold by the wife of the assessee is reasonable and hence, we confirm the decision of the CIT(A) and dismiss the grounds raised by the assessee on this issue. Unexplained investment in construction of house based on the valuation report of the DVO - AO to ascertain the investment in the house property, referred the case to the Valuation Cell and the Valuation cell had estimated the cost of construction at ₹ 75.53 lakhs which was contested by the assessee who worked out the estimated construction at ₹ 66.10 lakhs - HELD THAT:- CIT(A) directed the AO to verify the rate adopted by the Valuation Cell whether the same is based on CPWS rate and if so, the AO should give a deduction of 15% thereon to bring at par on the state PWD rate. Further, he directed that in terms of the judicial pronouncements as above including that of the jurisdiction Tribunal, a 10% should be allowed for self supervision charges to arrive at the cost of construction instead of 7.5% allowed by the Valuation Cell. In other words, the AO should work out the cost of construction afresh keeping in view the direction as above. We are of the view that the directions given by the CIT(A) to AO are proper and no interference is called for in the directions of the CIT(A) and accordingly, the ground raised by the assessee is dismissed.
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2019 (12) TMI 670
Addition on account of closing stock - HELD THAT:- Material on record including the tax audit report, original return as well as revised return, we observe that the assessee has inadvertently mentioned the wrong figures of stock in the original return which has lead to corresponding increase in the net profit of the assessee resulting into high and unrealistic net profit, which was rectified by filing revised return on 29/03/2013. After examining the original as well as revised return along with tax audit return and audited financial accounts, we are of the view that there is an inadvertent mistake on the part of the assessee while preparing the original return which was correctly rectified by way of revised return on 29/03/2013. Moreover, the AO, in the remand report dated 24/03/2017 which was called for during the course of appellate proceedings before the CIT(A), submitted that after considering the details and evidences filed during the course of remand proceedings, the revised return of income ₹ 17,81,124/- appears to be correct. We are inclined to set aside the order of the CIT(A) and direct the AO to delete the said addition made on account of closing stock. Thus, this ground of appeal raised by the assessee is allowed. Allowable business expenses - HELD THAT:- We have examined the orders of the lower authorities and also the remand report and observe that the disallowance was made purely on ad hoc basis without assigning any specific reason or giving any finding that the expenses were not incurred in connection with the business of the assessee wholly and exclusively. Disallowance made by the ld.CIT(A) needs to be restricted to 10% of the miscellaneous expenses and 5% of the labour expenses and gift to the parties and 5% of the travelling expenses. Consequently, the assessee gets relief of ₹ 71,625/- under the head miscellaneous expenses and under the head labour expenses , gift to the parties and travelling expenses . Accordingly, this ground of appeal raised by the assessee is partly allowed.
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2019 (12) TMI 669
Reopening of assessment u/s 147 - Validity of reasons to believe - HELD THAT:- Reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and /or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the AO to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. We are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.
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2019 (12) TMI 668
Addition of value of closing stock being diminution in the value of closing stock and claiming depreciation therein - HELD THAT:- The assessee computed his income according to cash or mercantile system of accounting in term of section 145 and accounting standards notified by the Government of India from time to time. The assessee values its closing stock at lower than the cost or net reliable value and to arrive at the valuation of closing stock from the perspective of accounting standards. The assessee reduced the value of certain items from closing stock to appropriate reflect its net reasonable value which is lower than the cost. The said reduction from the cost represents the wear and tear of the stocks of the items which are lying in the inventory/showrooms. We noted that there is no factual difference in this year and any adjustment in the closing stock for the year no. 1 would consequently result in the adjustment to the opening stock of year No. 2. Further, we noted that the assessee has filed complete details of valuation of closing stock in its paper book along with statements showing details of subsequent sales with regard to the items of closing stock which were revalued to net reliable value along with sample copies of invoices with respect of subsequent sales. From those details it is clear that net reasonable value adoptable by the assessee for the purpose of value of closing stock in certain cases is as per the prevailing accounting practices as accounting standards 2. Hence, we find that no infirmity in the order of CIT(A) and respectfully following the Tribunals decision for AY 2012-13, we confirm the order of CIT(A) and deleting the addition. Adjustment made while computing book profit under section 115JB to the closing stock - HELD THAT:- We find that this issue is answered in the first issue and the same finding will apply here also. Hence, we confirm the order of CIT(A) deleting the addition. Disallowance of provision for leave encashment under section 43B - HELD THAT:- Calcutta High court in the case of Exide Industries Limited And Anr. vs Union Of India (UOI) [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] whereby the provision of section 43B(J) of the Act struck down as arbitrary but stayed and is pending before Hon ble Supreme court . Hence, it was requested that the matter can be kept pending till the decision of Hon ble supreme court. On this, we require the learned DR, to explain the situation. He only requested that this matter can be referred back to the file of the Assessing Officer who will decide in term of the Hon ble Supreme Court decision. After hearing both the sides and going through the records, we restore the matter back to the file of the Assessing Officer to decide the claim of assessee in term of the decision of Hon ble Supreme Court in the case of Excide Industries [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] . This issue of the assessee s CO is set aside to the file of the Assessing Officer.
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2019 (12) TMI 667
TP Adjustment - selection of comparables - HELD THAT:- Assessee was engaged in the business of distribution and sale of digital switching equipment, cellular exchange equipment, and other telecommunication equipment and provision of related services. It also provided intragroup marketing, technical support and contract software development services. The assessee had entered into various international transactions with its Associated Enterprises thus companies functionally with that of assessee need to be deselected from final list. Deduction on account of liquidated damages - HELD THAT:- As assessee pointed out that it was a contractual obligation, which was not complied with but the Assessing Officer/DRP called it penalty; in fact it was a contractual liability on delay and supply of equipment. It was further pointed out by the Ld.AR that similar issue arose before the Tribunal in the preceding year and the issue has been remitted back to the Tribunal vide para 5 at pages 28 29. We find that similar issue has arisen in the preceding years and the matter has been remanded back to the file of Assessing Officer for deciding the issue afresh. Following the same parity of reasoning, we remit this issue back to the file of Assessing Officer to follow the directions of the Tribunal in the preceding year. Claim of expenditure on account of TDS paid during the year - HELD THAT:- In view of the provision of section 40(a)(ia) where the assessee does not deposit the TDS, then such expenditure is not to be allowed as deduction in the hands of the assessee. However, in case the TDS is deposited in the succeeding year, then that expense needs to be allowed as deduction in the year when TDS is deposited. The said facts need to be examined by the AO. Hence, we remit this matter back to the file of Assessing Officer to allow the claim of the assessee after due verification and after allowing reasonable opportunity of hearing to the assessee. Thus, ground raised by the assessee are allowed for statistical purposes.
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2019 (12) TMI 666
Deduction u/s 80-IB(10) - HELD THAT:- Considering the facts in the present case are identical to earlier years and follow the precedence and direct the AO to grant deduction u/s 80IB(10) Disallowance u/s 40(a)(ia) - non- deduction of TDS on provision for expenses - contentions of the ld. AR that no bills/invoices were raised by the parties. Hence, there is no liability to pay the amount. But as an Accounting Policy, the assessee has made provision in the books of accounts - HELD THAT:- we found this disputed issue was dealt by the co-ordinate bench in TE CONNECTIVITY INDIA PVT. LTD. [ 2016 (5) TMI 1222 - ITAT BANGALORE] and SANGHI INFRASTRUCTURE LTD. [ 2018 (7) TMI 2072 - GUJARAT HIGH COURT] where provision was made by assessee for expenses for which bills were not received during year under consideration, no section 40(a)(ia) disallowance could be made for nondeduction of TDS. In the present case, no bills and invoices were raised by the creditors and no liability of payment arose. Hence we, followed the judicial decisions and are of the opinion that the assessee is under no obligation to make payment and no TDS is deducted and accordingly we direct the AO to delete the addition and allow the grounds of appeal of the assessee.
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2019 (12) TMI 665
Addition u/s 68 - unexplained cash credit - HELD THAT:- In nut-shell it is made out that injustice is done to assessee and bone of contentions made out by assessee were not appreciated by authorities below in right perspective despite all material placed by it before authorities below. It is also made out that appeal of the assessee was kept pending by CIT(A) for a period of almost 10 years and effective opportunity was not accorded by learned CIT(A) while disposing the appeal by CIT(A). Our attention was drawn to para 3 of learned CIT(A) order. Prayers aremade to set aside the issues in its appeal to the file of the AO for fresh adjudication on merits in accordance with law. We find merit in the contentions of assessee and we are of the considered view that issues in this appeal need to be restored to file of AO for framing denovo assessment on merits in accordance with law. We make it clear that these amounts stood credited in books of accounts of the assessee and primary onus is on assessee to prove identity of the creditors, creditworthiness of the creditors and genuineness of the transactions through cogent and credible evidences. In case the assessee did not cooperate in set-aside proceedings, the AO shall be at liberty to adjudicate the issue on merits in accordance with law based on material on record. AO is directed to admit evidences/explanations filed by the assessee in its defense during set aside proceedings. Needless to say that AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in denovo assessment proceedings
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2019 (12) TMI 664
Disallowance in respect of business promotion expenses debited to Profit and Loss Account - AO has disallowed the said expenditure during year solely based on a letter from Taj Palace Hotel in which pre-wedding function is noted, whereas the fact on record suggest that there was no wedding ceremony took place in the family of the assessee during the year and it was happened only in the years 2004 and 2014 - HELD THAT:- Function was organized for lunch only and the expenditure incurred does not suggest any expenditure on account of DJ, Flower decoration, stage etc., suggesting that there was any marriage function organized in the family. Further, the invoice of Taj Palace Hotel issued and banquette challans does not mention any pre-wedding functions. Further, if there had been wedding in family, the other expenses on various transactions could have reflected in capital account of the assessee. Therefore, these circumstantial evidences lead to infer that the expenditure was in the nature of business promotion only, hence, such disallowance made by the AO is without corroborating evidences and without cross examining the parties, hence same are deleted. With regards to 1/5th of the disallowance of remaining expenses, we find that the AO has pointed out that some of the expenditure were incurred for personal travelling and are in the nature of personal, therefore, the nature of expenditure is such in which personal element cannot be ruled out. Therefore, we are of the considered opinion that AO was justified in making disallowance of the remaining expenses @1/5th, accordingly the disallowance of ₹ 2,02,993/- confirmed. This ground of appeal is partly allowed. Disallowance of Travelling Expenses being 1/4th of the total travelling expenses on account of personal element - HELD THAT:- We are of the view that the AO has cited some instances of Air Tickets which are definitely personal in nature. It is, further seen that the various family members have travelled in India which are not for the purpose of business, therefore considering the totality of the facts, we are of the considered opinion that disallowances restricted to 1/5th of the total expenses by the ld.CIT(A) are appears to be reasonable, hence this ground of appeal of the assessee is dismissed. Disallowance of vehicle expenses - HELD THAT:- AO disallowed 1/5th of the said amount and worked out the disallowance of ₹ 2,41,061/-. The ld.CIT(A) has also restricted the disallowances to 1/5th of the vehicle expenses. However, before us, that the ld.Counsel has argued that the disallowance on account of personal element in respect of car depreciation is not justified and against the Law. We find this argument of the ld.Counsel is valid, therefore 1/5the of the disallowances attributable to car depreciation of ₹ 8,33,187/- are deleted. The AO is directed to recalculate the disallowance, accordingly, out of vehicle expense. Remaining disallowances @1/5th restricted by ld.CIT(A) are upheld, accordingly, this ground of appeal is therefore partly allowed. Rate difference on cancellation of contract of purchase of goods - HELD THAT:- Transaction could be effected by orgal agreement, which not prohibited by law. Since, the Om Exim, is a unit of M/s.Ram Kishore Chemical Co., therefore, non-appearing the name of Om Exim is of no consequence. The evidences filed by the assessee in the form of debit notes, confirmation, bank accounts and payments has not been refuted by the AO. In view of these facts, we are of the considered opinion that the assessee has incurred a business loss, hence same is allowable as business expenditure, accordingly the disallowance / additions made by the AO are therefore deleted.
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2019 (12) TMI 663
Reassessment proceedings u/s.147 - as argued issue of notice u/s.148 without application of mind on the material provided by the Investigation Wing of the Department and giving mechanical approval of 151(2) with proper satisfaction and reasons and competent authority - HELD THAT:- Where the content of the notice are correct and which has been issued in the correct context then typographical error in address of PAN does not have material impact as per provisions of section 292B of the Act. We, further find that the assessee has duly received the notice u/s.148 of the Act and duly participated in the assessment proceedings and also stated that the original return filed by it may be treated as return in response to notice u/s.148, therefore any defect in the notice presumed to have been validly served as per provisions of section 292BB of the Act. With regard to contention of the assessee that the AO has failed to apply his mind and notice has been issued without application of mind, we find that the AO was in possession of the information from the ACIT, Central Circle-10, New Delhi which stated that the parties under consideration from whom the assessee has shown transactions were only accommodation entry provider, which was admitted in their statement recorded u/s.131 of the Act. We, further note from the reasons recorded at para 2, page 36 that the AO has categorically mentioned that he has scrutinized the audited accounts for the assessment year ending March 2006 which shows that the assessee has disclosed these transactions but the fact that the assessee company has obtained accommodation entries from the above mentioned three entities controlled by Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain was not disclosed. The entry provider entries did not have any genuine business activity as admitted before ACIT, Central Circle-10, New Delhi, therefore, the AO had reason to believe that by the taxable income represented the transactions with the above cited entities escaped assessment due to failure on the part of the assessee company to disclose material facts truly and fully necessary to make assessment for A.Y. 2006-07. Thus, we find that the AO has duly applied his mind and verified the information from the audited accounts of the assessee. Therefore, the contention of the ld.Counsel that the notice u/s.148 has been issued without application of mind does not hold water. - Decided against assessee.
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2019 (12) TMI 662
Undisclosed income introduced in the form of agricultural income - HELD THAT:- Issue involved in the assessee s appeal is identical as in the case of sister concern in case of M/s. Gullu Mal Gulachi Developers Pvt. Ltd. vs. ITO [ 2019 (12) TMI 628 - ITAT JAIPUR] CIT (A) has taken a reasonable percentage of 15% expenditure of the gross agricultural income and that too the agricultural income from agricultural operations excluding the income from sale of trees. Hence, in the facts and circumstances of the case as well as the prevailing conditions in the agricultural sector, the claim of the assessee cannot be accepted. CIT (A) has taken a reasonable view in estimating the expenditure at 15% - No error or illegality in the order of the ld. CIT (A) in estimating the expenditure @ 15% of the gross agricultural income.
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2019 (12) TMI 661
Interest free loans to sister concerns - HELD THAT:- Hon ble Apex Court in the case of CIT vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] has affirmed the view of the High Court to the effect that if the interest free funds available to the assessee were sufficient to meet its investment, then it could be presumed that the investment were made from the interest free funds available with the assessee. The Apex Court in the case of Hero Cycles Ltd. [ 2015 (11) TMI 1314 - SUPREME COURT] also analyzed laid down the same dictum. In the instant case, the interest free funds available with the assessee were more than the advance paid to its sister concerns, therefore the issue in hand remanded to the file of AO to decide accordingly as per dictum of the Hon ble Apex Court. Ground No.1 2 are co-related and hence allowed for statistical purposes. Interest subsidy by the Revenue Authorities as Revenue receipt - HELD THAT:- CIT(A) has correctly observed that the appellant has himself shown the amount of interest subsidy as Revenue Receipt however, it is a fact that as per the judgment of jurisdictional High Court in the case of Sh. Balaji Alloys (supra), the interest subsidy has been treated as Revenue receipt, hence in view of the same, the Assessing Officer is directed to consider this aspect afresh while following the judgment of the Jurisdictional High Court in the case of Sh. Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] Disallowance of Bank Interest expenses will decrease the (claimed) loss of the assessee, but will also increase deduction u/s 80-IB - HELD THAT:- As in the case of Sunandan Aggarwal Vs. ITO, Jammu [ 2016 (2) TMI 1266 - ITAT AMRITSAR] the disallowances of interest shall result in decrease of loss and therefore, cannot be treated as taxable income as the same will not change the amount of deduction u/s 80-IB of the Act. In the interest of justice, in our considered view, it would be appropriate to remand the instant issue to the file of Assessing Officer for decision afresh as per dictum of aforesaid tribunal's judgments. Hence, revised ground No.4 also stands allowed for statistical purposes.
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2019 (12) TMI 660
Revision u/s 263 - Assessment proceedings u/s 143(3) - HELD THAT:- Books of accounts, voucher Bank statement invoice and purchase bills are ready available for your inspection. In view of the above, we hold that the assessment order was framed under section 143(3) of the Act after due verification by the AO. Accordingly, we are of the view that the order of the AO cannot be held as erroneous insofar prejudicial to the interest of Revenue on account of non-verification of the facts as stated above. See MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT] - We quash the order passed by the Ld. PCIT under section 263 of the Act. Hence the ground of appeal of the assessee is allowed.
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2019 (12) TMI 659
Disallowance u/s.14A r.w.Rule 8D - HELD THAT:- ITAT in the own case of the assessee bearing [ 2018 (9) TMI 1743 - ITAT AHMEDABAD] has deleted the addition made by the AO on account of interest expenses by observing that the interest income exceeds interest expenses. Respectfully following the same we delete the addition confirm by the Ld.CIT (A) on account of interest expenses. Regarding the administrative expenses, we note that the assessee claimed that it has not incurred any expenses. However, the learned AR for the assessee before us has not demonstrated based on the documentary evidence that the assessee has not incurred any expenses in connection with the exempted income. Accordingly, we do not find any reason to interfere in the finding of the authorities below. Hence, the ground of appeal of the Revenue is dismissed and ground of appeal of the assessee is partly allowed. Addition made by the AO in part u/s 14A r.w. Rule 8D while determining the book profit u/s.115JB - HELD THAT:- Disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] Disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - HELD THAT:- We feel that ad-hoc disallowance will service the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the Revenue and the assessee are partly allowed. Addition on account of Professional Fees - HELD THAT:- The income tax has to be levied in the hands of the right assessee and the right assessment year, but the fact of the present case are different so far as the assessee is liable to pay tax under the provision of MAT. Thus we agree with the contention of the ''Ld.AR, that even if the impugned income is added to the total income of the assessee then also it will be tax neutral exercise. It is because there will not be any change on the tax amount as the assessee is paying tax under the provision of MAT. There is no dispute that the impugned income is taxable under the Act, and therefore the same has been offered to tax in the subsequent assessment year. Thus there cannot be any benefit to the Revenue by adding the impugned income to the total income of the assessee in the year under consideration. Hence we are not inclined to uphold the findings of the authorities below. Accordingly we set aside the order of the ''Ld.CIT (A)'' and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Addition of the total development expenses - whether the amount of profit declared by the assessee can be enhanced by the amount of expenditure incurred by it which were not claimed as deduction being part of closing inventory ? - HELD THAT:- AO should reduce the impugned expenses from the amount of closing inventory and disallow the corresponding expenses debited in the profit and loss account, leaving the profit as declared by the assessee intact. Whether the impugned expenses needs to be added as a part of the closing inventory ? - There is no ambiguity that the expenditures incurred by the assessee in connection with the inventories needs to be added in its value. But such expenditure must be based on the documentary evidence. In the case on hand, the learned CIT (A) has given very clear finding that the assessee has not produced the documentary evidence in support of such expenses except a ledger which is not sufficient enough to justify the genuineness of the expenses. The learned AR for the assessee has also not produced any supporting document in connection with such expenses. Therefore, in the absence of documentary evidence, we concur with the finding of the learned CIT (A). There cannot be any addition to the total income of the assessee on account of such expenses for the reasons as discussed in the preceding paragraph. Accordingly, we direct the AO to reduce the value of the inventory for the work in progress as well as disallow the corresponding expenses debited by the assessee in the profit and loss account. Hence, the ground of appeal of the assessee is allowed in terms of the above.
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2019 (12) TMI 658
Deduction u/s 80IA - HELD THAT:- There is no dispute at the end of Revenue as to the eligibility of assessee fulfilling the condition needed to claim deduction u/s. 80IA(4). We therefore respectfully following the judgment of Jurisdictional High Court in the case of Gujarat Alkalies and Chemicals Ltd. [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] as well as the decision of the Tribunal in the case of assessee for A.Y. 2006-07 2007-08 are of the considered view that assessee has rightly computed the deduction u/s. 80IA(4) r.w.t 80IA(8) by calculating the market value of the power generated by the captive power plant by adopting the rates charged by the Gujarat Electricity Board to its customers. We accordingly set aside the findings of lower authorities and allow the respective grounds of appeal of assessee. MAT computation - not reducing the provision written back in the profit and loss account from the book profit under section 115JB - HELD THAT:- A plain reading of the above provision reveals that the amount of provision written back shall be reduced from the book profit if the same has suffered the tax under MAT provision in the earlier years. Apparently, it appears that there is no ambiguity that the provisions pertaining to the assessment year 2002-03 and 2003-04 were not suffered to tax under the provisions of section 115 JB . However, the question arises where the assessee was subject to tax under normal computation of income even after giving the effect of such provision under MAT liability. In such a situation, we are of the view that it shall be deemed as if such provision has suffered to tax under MAT provision and the assessee shall get benefit in the year in which it is written back in the profit and loss account while determining the income under MAT provision of the Act. See M/S. GUJARAT INDUSTRIAL INVESTMENT CORP. LTD. AND VICE-VERSA. [ 2018 (9) TMI 1924 - ITAT AHMEDABAD] - Impugned provision written back needs to be reduced from the book profit as claimed by the assessee. Accordingly we reverse the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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Customs
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2019 (12) TMI 657
Levy of ADD - H R Stainless Steel Sheets - rejection of declared value - Rule 5 and 12 of the Customs Valuation Rules, 2007 - benefit of N/N. 104/2011 dated 25.11.2011 - misdeclaration of goods based on examination of goods and Statement of the Director of the Appellants - quantum of redemption fine and penalty - HELD THAT:- On examination the goods were not found to be as declared by the appellants on the Bill of Entry. The examination was conducted in the presence of the representative of the CHA. In his statement recorded under Section 108 of Customs Act, 1962 on 06.07.2012, Shri Bharat N Kanungo admitted the fact about misdeclaration of the goods. He also admitted that supplier has described the goods at his instance in the manner they have been declared. He also stopped the further investigations in the matter as he waived the requirement of Show Cause Notice and sought the adjudication of the case after grant of personal hearing by the adjudicating authority. At the time of investigations i.e. examination of the goods or during the time when the statement of Shri Kanungo was being recorded, not even a single word in respect of Mill Test Certificate etc was stated. Further the Mill Test Certificates produced are the certificates not issued by the supplier to them, but are from certain manufacturing facility located in Belgium to the suppliers of good. There is nothing on record to co-relate the same with the goods imported as these were not produced with the import documentation nor find any mention on the said documents. Even Shri Kanungo has in his statement referred to the existence of any such Mill Test Certificates - there are no substance in the submissions of the appellants in this respect specifically when mis-declaration of the goods has been admitted by them. Since Appellants had waived of the requirement of show cause notice they could not in subsequent proceedings complain about the non supply of the relied upon/ relevant documents - In view of the above facts and admissions made we are not inclined to accept the submissions made by the appellants relying on the standing order of 21.02.2009 in respect of the examination undertaken. The charge of misdeclaration of the goods is upheld - Since the goods have been misdeclared they are liable for confiscation under Section 111 (m) of the Customs Act, 1962 and appellants are liable for penalty under Section 112(a) ibid - quantum of redemption fine and penalty reduced. Appeal allowed in part.
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2019 (12) TMI 656
Smuggling - Gold - bills produced by the appellants in dispute - appellants are aggrieved by the confiscation of gold which was initiated on the interception of Shri S. Ramki and Shri P. Dilli Raja at the Korrukupet railway station - power of Commissioner (Appeals) to remand the case - Section 128A of the Customs Act, 1962 - HELD THAT:- Instead of confining himself to comparing or ascertaining the fact after obtaining certified copy of the bail application, has conducted re-adjudication as to whether bills are genuine or not. It is however recorded by him that bills were not available during seizure and that these were submitted to court later. Needless to say that the bail application was filed before court only after arrest and seizure. He does not state that the bills were not mentioned in the bail application. Ld. Counsel has furnished certified copy of bail application submitted before the George Town Court, Chennai. Ld. A.R has countered the said application submitting that the impression of the seal seen on the application is dated 20.03.2014 and that too of Economic Offences Court at Egmore and therefore the certified copy cannot be relied. On perusal of the bail application furnished before me which is seen in page 12 of the compilation, the docket sheet of the bail application shows that it was filed on 01.03.2014. The Court has given the number as M.P.No.420/2014. The notice of the application is seen received by the Prosecutor on 01.03.2014. The order granting bail was passed by the Metropolitan Magistrate, George Town on 03.03.2014 - the doubt raised by the Commissioner (Appeals) whether the appellants were in possession of the bills at the time of filing bail application itself, stands eliminated. The bail application has been countered by the Ld. A.R on the basis of the impression of seal seen on the main application. This document is photocopy of a certified copy obtained by the appellants from the Magistrate Court, Egmore. The application for certified copy was made on 2.11.2017 and certified copy was delivered on 9.11.2017 from the impression of seal made by copyist Superintendent for issue of certified copy - it can be reasonably inferred that the seal seen on the main bail application is the impression of the seal by the Egmore Court when the case file was received by the said court. Since the seal of issuing certified copy is present on this document I do not find any reason to disbelieve the same. Therefore, it can be concluded that the appellants were in possession of the bills dt.18.2.2014, 19.2.2014 and 22.2.2014 at the time of filing the bail application itself. Minor discrepancy alleged by department to the bills - HELD THAT:- The only discrepancy noted by the department, is that in the bill No.366, the purchaser is shown as Mr. Ramachandran, Moreh, Manipur whereas in the carbon copy kept by the seller, the name is written as V.Ramachandran, Moreh. There is no discrepancy or difference with regard to the description of gold. In para 11 of the earlier order by Commissioner (Appeals) he has discussed this aspect. The sellers have given statements admitting sale of gold vide such bills to the appellants. The books of account kept by the sellers in their ordinary course of business also reflects the transaction. Except for slight difference in the name mentioned in one bill there is no serious discrepancy. There is nothing to suspect that the bills were created at a later stage. The findings made by Commissioner (Appeals) vide order dt. 28.9.2017 ought not to have been interfered by the LAA - appeal allowed - decided in favor of appellant.
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2019 (12) TMI 655
Refund of SAD - N/N. 102/2007-Cus. dt. 14.09.2007 - rejection on the ground that invoices do not bear endorsement as required under condition 2(b) of notification No.102/2007, that the wordings used in the endorsement by the appellant does not correlate with the wordings of the endorsement as required under condition 2(b) of the notification, the Chartered Accountant certificate was not accepted by the authorities below alleging that it is factually incorrect and that the description of the goods in the Bills of Entry and the sale invoices do not match. Rejection on the ground that invoices do not bear endorsement as required under condition 2(b) of notification No.102/2007, that the wordings used in the endorsement by the appellant does not correlate with the wordings of the endorsement as required under condition 2(b) of the notification - HELD THAT:- The appellant has issued commercial invoices for sale of the goods. In Chowgule Company [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB) ] the very same issue was analysed by the Larger Bench of the Tribunal which held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus, notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. - non-fulfilment of condition 2(b) cannot be a ground for rejecting the refund - rejection of refund set aside. Rejection of refund is that the Chartered Accountant certificate is flawed or incorrect and therefore not acceptable in evidence - HELD THAT:- There is no allegation raised by the department that these figures do not correlate. The only allegation with respect to Chartered Accountant certificate is that since he has stated that the sale invoices bear endorsement the same cannot be accepted - since condition 2 (e) to produce Chartered Accountant certificate so as to correlate VAT and SAD paid has been furnished by the appellant, the rejection of refund claim on this count against the assessee requires to be set aside. Mismatch of the description of the goods in sales invoices and the Bills of Entry - HELD THAT:- On perusal of description of the goods mentioned above, it is found that character of the goods (paper) has been shown in the sales invoices. So also, the goods sold are paper of different grades. The appellant has pointed out that he has used description of the goods as known in the trade in India. Department does not have a case that the description shown in the invoices are not the goods known in the local market in India. Thus, there are no major discrepancy in the description of the goods in the Bill of Entry and the sale invoices. The Tribunal in the case of Hanuman Timber Co. Vs CC (Port-Export) Chennai [ 2017 (7) TMI 749 - CESTAT HYDERABAD ] relied upon by Ld.A.R had rejected the refund holding that there is no major mismatch of the goods. In the said case, the import was of timber logs and whereas in the sale invoices the goods were described as face veneer . The goods are entirely different and therefore it is not the case of minor mismatch for which reason the Tribunal has rejected the refund. The impugned order rejecting the refund claim is set aside - Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 654
Refund of SAD - N/N. 102/2007 - time limitation/relevant date for filing of refund claim - in view of Section 27 of the Customs Act, appellant was entitled for refund within one year of the date of final assessment - in this case provisional assessment was finalised on 27-12-2017 - HELD THAT:- Perused the copy of the confirmation of assessment vide letter of the Asst. Commissioner of Customs in Annexure (6) of the additional submissions. Further going by the OIO and OIA, it can be said that there is nothing available in these two orders or in the case records to substantiate that such ground was taken before the authorities below while claiming refund to bring the claim into the purview of Section 27 of the Customs Act. The issue has been dealt in the case of M/S BITUMEN CORPORATION I LTD. VERSUS COMMISSIONER OF CUSTOMS, NHAVASHEVA-II [ 2019 (3) TMI 125 - CESTAT MUMBAI] where it was held that The appellant refund claim is to be reassessed on the basis of date of payment of CST/VAT etc. that was earlier deposited by way of SAD that has been exempted vide Notification No. 102/2007-Cus. and 93/2008-Cus. and allowed if claim is made within one year of payment of CST/VAT. The appellants are entitled to refund of SAD on production of proof of VAT/CST payment within a year of their filing application before refund sanctioning authority who is directed to complete the refund process within a period of two months from the date of receipt of this order with due regard to Section 11/BB of the Central Excise Act dealing with interest on delayed refunds - appeal allowed.
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2019 (12) TMI 653
Levy of NCCD - case of the department is that the NCCD should be levied on the quantity as per bill of lading and not on actual shore tank receipt quantity - whether National Calamity Contingent Duty levied at specific rates is to be levied on actual Shore Tank Receipt Quantity or on the basis of Ullage Report/Bill of Lading Quantity? HELD THAT:- From the decision of the Tribunal in the case of BHARAT PETROLEUM CORPORATION LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI [ 2015 (2) TMI 127 - CESTAT MUMBAI] which was upheld by Hon ble Supreme Court in COMMISSIONER VERSUS BHARAT PETROLEUM CORPORATION LTD. [ 2016 (5) TMI 552 - SC ORDER] , it was clearly held that NCCD Duty which is levied at specific rates, it will be levied on the actual Shore Tank receipt Quantity - In the present case also the rate of NCCD is a specific rate and not Ad valorem. Therefore, the ratio of the above Judgment which finally settled by the Hon ble Supreme Court is squarely applicable in the present case. Therefore, the demand of differential NCCD based on Bill of Lading/Ullage Report is not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 652
Benefit of CVD exemption - Sr. No.88 and Sr. No. 8C(ii) of notification No. 6/2006-CE dated 01.03.2006 (as amended) - import of Filmtech Membrane (water filter parts) - classified under CTH 84212190 or not? - demand of differential duty alongwith interest and penalty - extended period of limitation. HELD THAT:- The issue on merits as submitted by the learned Authorized Representative is no longer res integra and covered by the decision in case of PURE CURE TECHNOLOGY VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , NHAVA SHEVA [ 2018 (12) TMI 617 - CESTAT MUMBAI] where it was held that the appellant themselves had admitted that exemption notification to the said product was inserted w.e.f.1.3.2007 mentioning through new Sr. No. 8B where the classification of sub-heading was shown as 842121. Interest and penalty - HELD THAT:- Once the appellants have paid duty and interest and have admitted their liability they are barred in subsequent proceedings, to claim the benefit of limitation in respect of the amounts so paid - in view of the statement made by the Appellant admitting the differential duty liability in respect of each of 13 Bill of Entries, after making the payment, the appellants are barred from taking any stand contrary to what has admitted by them. The fact that statement has been recorded nearly two months after the act of actual deposit the statement is voluntary, in absence of any retraction of the same - there are no merits in submission made by the Appellant in respect of the differential duty confirmed along with interest. Abatement of duty - Section 28 (2) of the Customs Act, 1962 - HELD THAT:- In terms of this sub section, when the son has admitted duty liability and had paid the same along with the interest due, the proceedings should have been abated against that person. In our view it is not the case of willful misstatement, suppression or mis-declaration, but a case of bonafide error in claiming the benefit of exemption which was not due to them, we do not find any merits in the penal proceedings undertaken against them - Since appellants have clearly and correctly described the imported goods as part of water filter, the error in claiming the benefit of wrong exemption notification cannot be act of deliberate misdeclaration - there are no merits in the order of Commissioner imposing penalty on the appellants under Section 114A. Appeal allowed in part.
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Insolvency & Bankruptcy
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2019 (12) TMI 651
Approval of Resolution plan - Section 30(4) of the Insolvency and Bankruptcy Code, 2016 - whether the approved Resolution Plan submitted by M/s. Dhanuka Laboratories Ltd. is viable and feasible or not? HELD THAT:- Issue notice, returnable in four weeks.
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2019 (12) TMI 650
Admissibility of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - compliance with Section 7(5)(a) of the Code or not - existence of debt and default or not - application under Section 7(2) is complete or not - disciplinary proceedings pending against the proposed resolution professional or not - HELD THAT:- The bouncing of the cheques on the reason albeit of account closed and the non-payment of the amounts thereafter clearly evidences the occurrence of default - The application is filed in the prescribed Form 1 and no defects therein have been brought out by the learned counsel for the corporate debtor. The application under Section 7(2) is therefore, treated as complete - the proposed IRP Shri Amit Gupta has filed Form No.2 (Annexure A-9 of the petition). The IRP has stated therein that there are no disciplinary proceedings pending against him with the Board or ICSI Insolvency Professionals Agency. The conditions provided for in Section 7(5)(a) of the Code are thereby satisfied - the application for initiation of CIRP in the case of the corporate debtor M/s C C Towers Ltd admitted - Directions for moratorium and appointment of IRP are given. Application admitted - moratorium declared.
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2019 (12) TMI 649
Non-payment of arrears dues of GST for the period prior to commencement of CIRP - net GST liability from the date of commencement of CIRP - Corporate Debtor to have access to its GST Portal Account to file GST Returns during the period of CIRP - HELD THAT:- If the Corporate Debtor's GST Portal is blocked, it is difficult to the Corporate Debtor to generate bills falling within the ambit of GST and pay the taxes for the post-admission period. Since law is clear that Tax authorities fall within the ambit of the Operational Creditor, as to the pre-admission claims are concerned, they are at liberty to make their claims before the Resolution Professional instead of insisting upon the Resolution Professional to pay the pre-admission dues before accepting the tax liabilities arising during the CIRP period. As to provisions of GST Act, since Section 238 of the Insolvency and Bankruptcy Code having categorically mentioned that IBC will have over riding effect on all other laws which are in contravention to the provisions of the IBC, RI cannot raise an objection saying since no provision has been made in GST or in its software to accept such accounts, the business happening in the market after initiation of CIRP through debtor company will come to stand still and in such situation no company under CIRP can function as a going concern. We hereby direct all the Respondents including the 13 th Respondent to allow the Corporate Debtor to have access to its GST Net Portal Account, permit the applicant to file GST Returns of the Corporate Debtor generated after commencement of CIRP without insisting upon payment of past dues of GST during the pre-admission period and accept net GST liability after availing eligible ITC from the date of commencement of CIRP and adjust such GST payment so remitted by the Corporate Debtor towards discharge of GST during the CIRP period.
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2019 (12) TMI 629
Approval of Resolution plan - Section 30(4) of the Insolvency and Bankruptcy Code, 2016 - whether the approved Resolution Plan submitted by M/s. Dhanuka Laboratories Ltd. is viable and feasible or not? - HELD THAT:- The objective of the I B Code, 2016 is Resolution and not Liquidation . Further, the aim of the Code is to consolidate and amend the law relating to reorganization and insolvency resolution of corporate persons, partnership firms and individual persons in a time bound manner for maximization of the value of assets of such persons (Corporate persons herein), to promote entrepreneurship availability of credit and balance interest of such persons (Creditors)/ stakeholders. The maximization of value of assets of the Corporate Debtor as also the maximization of the assets of the Financial Creditors and the Operational Creditors , are the basic essence of the I B Code - Even if the earlier unamended Section 30(2)(b) is considered, the basic feature of the I B Code was that an Operational Creditor cannot be paid anything less than the Liquidation Value and the basic principle is the maximization of the assets of the Corporate Debtor , balancing all the stakeholders by maximization of their assets, no Resolution Plan can offer any amount upfront or by other way, which is less than the Liquidation Value . It will be against the object of the Code as also the provisions of Section 30(2) of the I B Code. Infusions of fund for maximization of the assets of the Corporate Debtor cannot be counted for the purpose of the amount, which is being kept for distribution amongst the stakeholders, including the Financial Creditors and Operational Creditors , if it is less than the Liquidation Value , such Plan cannot be upheld, being against the object of the I B Code and Section 30(2) of the said Code - Admittedly, the amount offered in favour of stakeholders including the Financial Creditors and the Operational Creditors is being much less than the Liquidation Value , such Plan cannot be accepted. The impugned order dated 25/27th June, 2019 ordering approval the Resolution Plan is set aside - matter stands remitted to the Adjudicating Authority for decision in accordance with law.
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Service Tax
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2019 (12) TMI 648
Refund of unutilized CENVAT credit of service tax - rejection of claim on the ground that the appellant had failed to submit proof of having debited the amount of refund being claimed in his Cenvat credit account, as per the provisions of Para 2(h) of Notification No.27/2012-CE (NT) dated 18.6.2012 read with Section 142(4) of the CGST Act, 2017 - HELD THAT:- The appellant have reversed the CENVAT credit in their CENVAT credit account but the same was not shown in the ST-3 Returns because by the time refund was filed, GST has been introduced and filing of ST-3 returns itself was done away with. Further, the appellant has voluntarily debited the refund amount in GSTR-3B during May 2018 which clearly complies with the conditions of the Notification. Further, the Board has also clarified the said position in its Circular No.58/32/2018-GST. Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 647
Calculation of service tax - on which amount service tax liable to be paid - whether Service Tax liability is to be discharged on the amount actually received by the Appellant or on the amount shown in the trial balance sheet? - HELD THAT:- There is no hesitation in accepting the contention of the Appellant that Service Tax has to be paid on the basis of the amount received during that particular period. This is clear from the Trade Notice dated 3 January 1997. Though in the reply submitted by the Appellant and in the written submissions that were filed during the course of personal hearing, the Appellant had submitted that Service Tax had been paid on the amount actually received by the Appellant during the period but it will be appropriate to remand the matter to the Commissioner to examine the issue - Appeal allowed by way of remand.
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2019 (12) TMI 646
Recovery of service tax alongwith interest and penalty - receipts from members for providing club or association service and convention service - HELD THAT:- The appellant is national professional body of qualified pharmacists and, besides ensuring compliance with the highest standards, is engaged in improving the quality of their service - the appellant, whose membership comprises qualified pharmacists does not conforms to club or association services - demand in relation to tax as provider of club or association service fails. Convention services - HELD THAT:- The appellant does not offer convention services but gets events organised by professionals and, by collecting fees which are transmitted to such organisers, enables its members to participate in them. There is no allegation that any part of the fees charged by convention organisers is retained by the appellant. Thus, the activity is beyond the purview of taxability under section 65 (105) (zc) of Finance Act, 1994. Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 645
Nature of activity - service or sale - lease of 999 years is equivalent to sale or not - renting of immovable property service or not - conducting agreement in which the appellant, M/s Starcity Entertainment Pvt Ltd, executed with the conductor , M/s Movie Time, for granting conducting rights which also included an option to purchase, or lease, the theatre belonging to them - It is the contention of Learned Counsel that the transaction is nothing but a sale and hence beyond the pale of taxability under Finance Act, 1994. HELD THAT:- The appellant herein had initially contracted with M/s Movie Time for the use of the theatre for conducting and, on exercise of option, purportedly, of purchase, transferred possession itself against annual lease rental and one-time premium components. This would, prima facie, bring the contractual agreement within the scope of the rentals - Furthermore, as pointed out in the impugned order, the entire property, and its benefits thereof, had not been alienated by the appellant; the retention of right to built-up space above and around the contracted property was incorporated in the agreement. It could, therefore, by no means be determined to be a sale agreement as commonly understood. Accordingly, the consideration is for the limited use of the property which squarely fall within the scope of section 65(105)(zzzz) of Finance Act, 1994. The decision in HOBBS BREWERS INDIA PVT. LTD. VERSUS UNION OF INDIA [ 2016 (4) TMI 1173 - TRIPURA HIGH COURT] has made it abundantly clear that the claim of the petitioner therein for restricting the taxability to rent, and not the premium, was dismissed thereby laying down the principle that premium is nothing but an advance rent , and, therefore, taxable which was adopted by the Tribunal in RIICO LTD., M/S RAJASTHAN STATE INDUSTRIAL DEVELOPMENT INVESTMENT CORPN. LTD. VERSUS CCE, JAIPUR-II [ 2017 (5) TMI 673 - CESTAT NEW DELHI] to hold that, though premium was also taxable, an exception was carved out for lease tenor exceeding 30 years arising from the specific provision incorporated through section 104 in Finance Act, 1994 - Admittedly, this provision does not apply to the present transaction. In the established fact of absence of complete and entire ownership of the property and, in the light of the decision in re Hobbs Brewers India Pvt Ltd and in re RIICO Ltd, premium being rent , except in the peculiar circumstances of transactions with entities of state governments, the only issue that remains for resolution is the extent to which the decision in COMMISSIONER OF SERVICE TAX, NOIDA VERSUS M/S GREATER NOIDA DEVELOPMENT AUTHORITY, GREATER NOIDA [ 2015 (10) TMI 296 - ALLAHABAD HIGH COURT] favours the appellant. In re Greater Noida Industrial Development Authority there is no lack of clarity in the assertion of the Tribunal that Since the levy of Service Tax is on renting of immovable property, not on transfer of interest in property from lesser to lessee, Service Tax would be chargeable only on the rent whether it is charged periodically or at a time in advance. It appears that the principle of taxability that found favour was discarded in circumstances peculiar to that case and, the absence of challenge in such circumstances, is not to be presumed as acceptance of a contrary proposition - there are thus no contradiction between the two decisions of the Tribunal warranting a different conclusion. Thus, the lump sum payment becomes liable to tax under Finance Act, 1994 in addition to the periodic payments - appeal dismissed.
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2019 (12) TMI 644
CENVAT Credit - common input services for taxable as well as exempt services - general insurance service - insurance auxiliary service - separate record of consumption of input service, required under rule 6(2), were not maintained - rule 6(3) of CENVAT Credit Rules, 2004 - HELD THAT:- There can be no doubt that the credit availed on the impugned input services cannot be denied as the tax liability has been included in the value made over to the provider of service. Again, there can be no doubt that rule 6(1) of CENVAT Credit Rules, 2004 precludes the availment of credit attributable to input services used for providing exempted services except in circumstances of maintenance of separate accounts for receipt, consumption and inventory and taking credit only to the extent that is attributable to providing of taxable service; as an exception to these two, necessarily to be read in unison, the discharge of tax liability by restricting the debit of CENVAT credit to the percentage stipulated supra is acceptable in law. Such restriction is not, in any way, connected to the entitlement, or availability, of credit but is intended to ensure that, at any point in time, the discharge of tax liability by payment to the exchequer shall not be less than 80% of the dues. The computation of tax liability in the show cause notice has proceeded on the assumption that CENVAT credit which is not permissible to be utilised for discharge of tax liability does not accrue to the credit of the assessee and the accumulation thereof which could have been utilised after the scheme of computation was altered has not been taken notice of. Appeal dismissed - decided against Revenue.
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2019 (12) TMI 643
Levy of service tax - Restaurant Service - service provider and service recipient relationship - HELD THAT:- The Apex Court in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ] has held that the services rendered to the members of the club is not subject to levy of service tax as there is no service provider and service recipient relationship. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2019 (12) TMI 642
100% EOU - Classification of services - Business Auxiliary Services or not - appellant had engaged foreign commission agents in order to procure business for them - reverse charge mechanism - utilization of CENVAT credit - penalty - HELD THAT:- Prima facie, the nature of service rendered by the foreign agent is that of promotion and marketing of the appellant s goods which appear to fall under the category of business auxiliary services . In terms of Section 66A of the Finance Act, 1994 the appellant was liable to pay service tax under reverse charge mechanism being the recipient of the service. Utilization of CENVAT Credit - HELD THAT:- If the appellant had paid the service tax he could have availed cenvat credit of the same. They are already registered with the service tax department and could have used that cenvat credit for payment of service tax - Being a 100% EOU, if they are unable to utilise cenvat credit they could have applied for refund of unutilised cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. Penalty - HELD THAT:- Non-payment of service tax in this case was possibly due to a reasonable error or misunderstanding and there is no likely to be a motive to evade as they would not profit from such evasion - penalty u/s 77 and 78 set aside. The appeal is partly allowed to the extent of setting aside the penalties imposed under Section 77 and 78 of the Finance Act, 1994 - other part upheld.
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2019 (12) TMI 641
Refund of service tax - appellant entered into agreement with the developer of residential complex for purchase of flat - declared services or not - refund denied by the lower authorities on the ground that the appellant s agreement with the Developer was on 13.03.2015 whereas occupation certificate was given by the competent authority i.e. BMC on 07.09.2015, the service was declared service, and refund cannot be granted. HELD THAT:- The definition of declared services lays down the criteria of issuance of completion certificate by the competent authority. There is no powers or jurisdiction vested with the service tax authorities to dilute the said definition and to go the reasons for delay in issuance of completion certificate - As such the appellant s contention that the said certificate was not issued on account of non-functioning or delayed functioning of the State Environment Appraisal Committee cannot be appreciated. As such on the said ground, there are no merit in the contention of the appellant. Appellant also relies upon the Hon'ble Supreme Court judgement in M/S. LARSEN TOUBRO LIMITED ANOTHER VERSUS STATE OF KARNATAKA ANOTHER [ 2013 (9) TMI 853 - SUPREME COURT] , holding that the activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government - However, Learned counsel fairly agrees that the said decision was not referred to before the Commissioner (Appeals) or the adjudicating authority and as such their comments on the same are not available. Matter remanded to the original adjudicating authority for consideration of the said decision of the Hon'ble Supreme Court and to re-decide the matter accordingly - appeal allowed by way of remand.
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Central Excise
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2019 (12) TMI 640
Clandestine removal - admissibility of statements of co-noticees - statements of noticees recorded u/ s 14 of the Central Excise Act, 1944 did not bear the signatures of the officials who recorded the statements despite the fact that the same noticees had confirmed their statements in their subsequent statements also recorded under Section 14 of the Central Excise Act, 1944 - HELD THAT:- The Tribunal should have undertaken a more thorough scrutiny of the statements of the parties and other witnesses recorded by the officers of the appellant. The Tribunal being the last fact finding authority could have called upon the appellant to disclose as to which of the Officers has recorded the statements under Section 14 and to ascertain, as to whether or not, they were authorised to record such statements. The Tribunal should have also appreciated the reasoning given by the Adjudicating Authority that the earlier statements though not bearing the signatures of the Officer who recorded the same, stood incorporated in the subsequent statement made by the same person when he affirmed the fact that his statements was so recorded. Matter remanded back to the Tribunal for re-appreciation of the evidence - appeal allowed by way of remand.
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2019 (12) TMI 639
Demand of duty without proper classification of goods in dispute - Manufactured product, Vermax 002 and Vermax 004 - scope of SCN - Chargeable to service tax or not - HELD THAT:- The appellants were paying duty on the said goods till 30/06/2006. However, were simultaneously disputing the leviability of duty. On the advice of the consultant, they stopped paying duty on such goods from 01/07/2006 and started availing exemption. The raw material used by them for the manufacture of the aforesaid articles was co-mingled oil, which was classifiable under heading 2709. A Show Cause Notice was issued to the appellant which sought to confirm the demand of duty without specifying the heading under which the said product Vermax 002 and Vermax 004 are classifiable. The appellants sought the correct classification in their reply to the Order in Original. It is seen that the Show cause notice does not exactly classify the product. In show cause notice, there is no allegation seeking to change the classification claimed by the appellant. There a vague reference to chapter heading 2710 in the chemical examiner s report but there is nothing in the notice alleging that why the goods could not be classified under heading 2709. The notice simply seeks to appropriate the duty already paid by the appellant under protest. It is seen that in the Show Cause Notice there is no allegation as to why the classification claimed by the appellant viz 2709 should not be changed. And it also does not suggest why the goods should be classified under any particular heading. Thus, it is apparent that the appellants have been rightly pointing out that no demand can be made without classifying the finished products sought to be levied to tax. It is seen from the orders of lower authorities that they have only examined why the product is not classifiable under chapter heading 2709 sought by the appellant but none of them deal with the issue as to where the goods should have been classified or what should be a correct classification of goods. There is no allegation in the show cause notice seeking to change the classification of goods and there are no findings to that effect. Revenue cannot seek to demand duty without first classifying the goods under any particular heading. In any case, the burden of proving of classification lies on Revenue. The entire case of Revenue is that the goods are not classifiable under 2709. The Revenue has failed to establish under which heading goods are classifiable. The appeal of Revenue seeking impose redemption fine for enhancement of penalty is dismissed - decided against Revenue.
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2019 (12) TMI 638
CENVAT Credit - duty paying invoices - credit taken on the basis of triplicate and quadruplicate copy of invoices - whether credit taken on the basis of triplicate and quadruplicate copy of invoices is deniable under the fact that duty paid character, receipt of inputs and its utilisation and payment of output tax on final product is not in dispute? - time limitation - Time Limitation - whether SCN dated 10.07.1997 for the disputed period September, 1996 is barred by limitation in the absence of any allegation of suppression of facts, or mis-statement etc.? HELD THAT:- There is no allegation of any contumacious conduct, suppression of facts or any fraudulent conduct on the part of the appellant. Further, there is no allegation of non receipt of goods by the appellant in respect of which modvat credit was taken. The show cause notice dated 10.07.1997 for the alleged violation relating to the period September, 1996 was admittedly issued beyond the normal period of limitation (six months) from the date of filing of the return. Under Rule 57GG(10) of Central Excise Rules, registered dealer was required to file the monthly return within seven days from the close of each month alongwith the requisite documents. There is no case of deliberate defiance made out against the appellant. Further, the appellant is a Public Sector Undertaking and thus there is no element of taking credit wrongly for personal gain. Further, the ground of limitation was not taken in the earlier round of appeal, however, the same is taken for the first time before the Tribunal. As the question of law arises from the facts on record, the said ground is entertained by this Tribunal. The SCN is bad for invoking the extended period of limitation - appeal allowed - decided in favor of appellant.
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2019 (12) TMI 637
CENVAT Credit - input services - outward GTA services - period from 1-4-2005 to 31-3-2007 - HELD THAT:- Cenvat credit on outward GTS service was admissible since in the judgement of Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] , it was observed that tax paid on transportation of final products from the place of removal upto the first point may it be depot or the customer s place has to be allowed. The ground of rejection of admissibility of such Cenvat Credit on outward GTA by the adjudicating authority and its confirmation by the Commissioner (Appeals) was the want of documents by way of additional evidence to justify that transfer of goods occurred at the customers place to bring the case of the appellant within the conditions stipulated in CBSC Circular dated 23-08-2007, whereas show cause Notice itself confirmed that the transportation of goods from the point of manufacturer up to the place of removal (para 4) had occurred which went to the knowledge of respondent department during the course of CERA Audit conducted on the record of the assesse (para-2 of show cause-cum-demand Notice dated. 24-3-2010). Such rejection of appeal on narrow technical consideration by the Commissioner (Appeals) is unsupported by the principle of fair justice and good conscience - appeal allowed - decided in favor of appellant.
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2019 (12) TMI 636
Method of Valuation - Job-work - clearance of set-top-boxes - applicability of rule 6 or rule 10A of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 - Interpretation of statute - definition of job-worker was intended to be interpreted for application of rule 10A of Central Excise Valuation (Determination of Price of Excise Goods) Rules, 2000. HELD THAT:- The issue of valuation of goods in the hands of job-worker is one which is vexed the Tribunal and central excise authorities for long. It is obvious that in situations of the manufacture having been contracted out to specialists the declared value is not necessarily the base for determining the duty liability. The decisions, pertaining to job-workers and their excisability, and subsequently, the assessments, were rendered for the period before the Central Excise Tariff Act, 1985 came into force - The blurring of distinction between job-worker and principal manufacturer , except for determination of commercial equation, reduced the valuation issues in the hands of principal manufacturer to conformity with place of removal . The belated interpolation of rule 10A in the said Rules also points out to the same want of definition. In effect, a job-worker works on raw materials supplied by the principal manufacturer and is denied an option to sell the goods that emerge thereby and, in that context, the liability fastened on to someone, other than the manufacturer, on the basis of contract of price. It is seen from the records that on a former occasion when the taxability of set-top-boxes and non-inclusion of the value of material supplied therewith, rule 6 of the said Rules was held to be appropriate in accordance with rule 10A - The job-worker has been held to be a manufacturer on behalf of principal-manufacturer and the supply of inputs for goods by either the principal-manufacturer or any other person authorized by him, to suffice as job-worker . The definition of job-worker , as incorporated in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 would not cover the transactions, as well as the activities, that characteristic occur in the present dispute - Resort to rule 10A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is, therefore, not legal and proper. Appeal allowed - decided in favor of appellant.
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2019 (12) TMI 635
Valuation - manufacturer of sugar and sugar confectionery and chocolates and other food preparations - packages, bearing the inscription For Industrial Use/Institutional Use As Raw Material Not For Retail Sale , were also being sold to ultimate consumers - diversion of goods claimed to have been intended for industrial or institutional use - section 4A of Central Excise Act, 1944 - time limitation. HELD THAT:- The statutory authorities for enforcement of Legal Metrology Act, 2011 have not initiated any action against the appellant herein. The contents, or lack thereof, in the returns prescribed under Central Excise Rules, 2000 does not find, a place in the impugned order or the show cause notice. Time Limitation - HELD THAT:- Limitation is to be decided on the facts of each case. The appellate authorities can only adjudge whether the facts have been appreciated properly and applied against established law. The adjudicating authority does not appear to have applied its mind to this essential aspect that has a bearing on the outcome of the process initiated by the show cause notice - it is considered appropriate to set aside the impugned order and matter remanded back to the original authority for a fresh decision on this sole aspect after granting an opportunity to the appellant to be heard on all the submissions. Appeal allowed by way of remand.
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2019 (12) TMI 634
Classification of goods - MV Royale Floatal - the assessee had sought classification under heading 8905 of the First Schedule to the Central Excise Tarif Act, 1985 and, against the proposal in the show cause notice to classify it under heading no. 8903, the adjudicating authority found it appropriate that heading no. 8901 should be adopted - to be classified under heading no. 8903 9990, or under heading no. 8901 9000? - benefit of N/N. 12/2013-CE dated 1st March 2013. HELD THAT:- The fine line of distinction between opulence and pleasurable degeneracy may pose a dilemma for the moralist but, in the absence of such considerations in ascertainment of rate of duty in the First Schedule to Central Excise Tariff Act, 1985, insistence upon classification on perception or usage would be tantamount to insinuating personal values which, while permissible in Legislative enactments, is to be eschewed in tax enforcement. The issue decided in the case of SHRI ASHOK KHETRAPAL, M/S GOA COASTAL RESORTS RECREATION PVT. LTD. VERSUS CC JAMNAGAR [ 2014 (4) TMI 421 - CESTAT AHMEDABAD ] where it was held that Casino vessel POG imported by the importer is principally designed to carry passengers and has been correctly assessed under CTH 8901. In the light of the decision in re Ashok Khetrapal and the absence of other binding precedent on the classification of casino vessels as pleasure boats , we are not required to examine the other submissions based on other decisions. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2019 (12) TMI 633
Auction - outstanding dues - priority of the charge - statutory charge in favour of the Sales Tax Department - Right to proceed against the secured asset by taking recourse to SARFAESI 2002 - Section 37 of the Maharashtra Value Added Tax - Section 26E of SARFAESI 2002 - HELD THAT:- A perusal of Section 37 of MVAT Act, 2002 reveals that though it commences with a non-obstante clause, but it recognizes that the same shall be subject to any provision regarding creation of the first charge in any Central Act. Therefore, if, by virtue of any provision under a Central Act, any priority or charge is created in favour of any party the same shall prevail - Section 31B in RDB Act 1993 was introduced by an Amendment in the year 2016 and was brought into force on 2nd September 2016. The non-obstante clause in the Section thus overrides any other law for the time being in force. The Section accords priority No.1 to secured creditors with respect to the secured assets. The only contention which needs to be noted which was made by learned counsel for Respondent Nos. 1 and 2 which was not made before the four learned Benches of the four High Courts in their opinions above noted, is that Chapter IVA which was inserted in SARFAESI 2002 comprising Sections 26B to 26E warrants a record to be made in the Central Register by the Central Registry creating a security interest - The argument is without any substance because the law declared in the four opinions above referred to is that if any Central Statute creates priority of a charge in favour of a secured creditor, the same will rank above the charge in favour of a State for a tax due under the Value Added Tax of the State. The sale proceeds realized are directed to be released to the petitioners by the Prothonotary Senior Master of this Court together with such interest which has accrued thereon - Petition allowed.
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Indian Laws
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2019 (12) TMI 632
Dishonor of Demand Draft - Recovery of debt - Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - HELD THAT:- The fact of the matter is that in both FMPL and VIL had acted on demand drafts which were prepared on stolen draft leaves, and in respect of which, an FIR was lodged by UBI and on the basis of which a charge-sheet has also been prepared by the police and filed in the concerned Court. A copy of the said charge-sheet forms part of the record in both cases. It shows that in both instances the bank drafts were fraudulently prepared on stolen bank draft leaves. These were not valid instruments and could not have resulted in any valid credit being made in the accounts of either VIL or FMPL. The Bank i.e. UBI was simply not liable to honour such DDs. It transpires from the charge-sheet that this was an inter-state fraud committed by an organised gang and not in respect of just the two DDs in question, but several others which were fraudulently used for making payments. Counsel for the Petitioners have no answer to the query posed by Court as to whether if the payment had been made by using fake currency, which both Petitioners accepted bonafide, any valid credit could have been given in their accounts by the respective bankers, who may have accepted such currency without checking them first. The answer had to be in the negative. A fake currency, even if acted upon bonafide and given credit, could not have resulted in such credit being continued once the fraud was discovered. The principle can be no different in the instant case. The DRT and the DRAT were right in finding that UBI was entitled to recover the aforementioned sums claimed against the two Petitioners - Petition dismissed.
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2019 (12) TMI 631
Right to information - Information sought with regard to one Sri.Srinivas, Inspector of Customs - petitioner submitted that in respect of the very same officer Sri.Srinivas, an order was passed by the Central Information Commission dated 25.9.2017 and therefore, it is evident that the information which was supplied to the petitioner that no such officer exists is incorrect and misleading - HELD THAT:- The information which has been supplied to the petitioner prima facie appears to be incorrect and misleading. However, the aforesaid aspect of the matter has not been considered by the Central Information Commission while passing the impugned order dated 23.1.2018. The complaint submitted by the petitioner has been rejected on the ground that the complainant could not substantiate his claims regarding malafide denial of information by the respondent. The impugned order therefore suffers from the voice of information, application of mind and cannot be sustained in the eye of law. The Central Information Commission is directed to decide the issue, whether or not, the application of the petitioner is incorrect/misleading, in the light of order dated 25.9.2017 passed by the Central Information Commission, by a speaking order - petition allowed by way of remand.
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2019 (12) TMI 630
Release of detained person - Smuggling - Gold - possession of the item or not - power of Court of judicial review - admissibility of statement under Section 108 of the Customs Act, 1962. HELD THAT:- It is apparent that husband of the petitioner was working at Sri Guru Ram Dass Ji International Airport, Amritsar as Assistant Manager (Fire Services). The detention order further records that from the statements recorded under Section 108 of the Customs Act, 1962, it has been found that husband of the petitioner had indulged in smuggling of the gold. For that purpose taking benefit of his position at the Airport, husband of the petitioner smuggled out the gold from the Airport in his own vehicle. The authority has also found that husband of petitioner has failed to explain construction and source of funding of Restaurant-cum- Hotel i.e. No Escape . The jurisdiction which this Court exercises in exercise of its power under Article 226, judicial review is limited. Against such orders, the High Court or the Supreme Court does not have power similar to appellate court. The normal rule is that when an isolated offence or isolated offences is/are committed, the accused is to be prosecuted. However, law of preventive detention enables the competent authority to detain a particular offender in order to disable/prevent him to repeat offences. As far as argument of learned counsel for the petitioner that the husband of the petitioner was picked up from the Hotel and there is no recovery, it may be noticed that preventive detention is not for the purpose of recovery. The detaining authority has considered the material available to it and thereafter, passed the order. Even statement of the husband of petitioner has also been recorded, which is admissible under Section 108 of the Customs Act, 1962. It is found from examination of material available that husband of the petitioner has a general habit and propensity to indulge in fraudulent activities by way of smuggling of goods, abetting of the smuggling of goods, engaging in transporting or concealing or keeping smuggled goods and harbouring persons engaged in smuggling at the cost of government revenue. From the reading of the order, it has further been noticed that husband of the petitioner not only manages and issues instructions for stay of the other offenders at Dubai but also ensures that they stay in his hotel i.e. 'No Escape'. Second submission of learned counsel is that once the husband of the petitioner has been placed under suspension then there is no use of continuing with the detention order - HELD THAT:- No doubt, at the time when the detention order was passed, one of the consideration was that the petitioner is employed as Assistant Manager (Fire) at the Airport, however that was not the only ground on which order of detention was passed. The detaining authority has passed detailed order providing various grounds for detention. This Court does not find any ground to interfere within its limited jurisdiction of judicial review - Petition dismissed.
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