TMI Tax Updates - e-Newsletter
December 19, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Input tax credit - When the statutory provision mandates compliance in a particular manner, it should be done in that particular way alone

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Articles

1. E-invoicing under GST

   By: Shilpi Jain

2. FILING OF GST RETURNS DURING CORPORATE INSOLVENCY RESOLUTION PROCESS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. The revenue trends since inception of GST - A presentation was made to the GST Council on the issue of revenue

2. GST Council decisions relating to changes in GST rates, exemptions in the 38th meeting held on 18th December, 2019 of the GST Council

3. GST Council’s decisions regarding Law and Procedure related changes - Recommendations of the GST Council in the 38th meeting of the GST Council held on 18.12.2019

4. DISPOSAL MANUAL - 2019

5. Gem Partners with UCO Bank and Bank of Maharashtra for Payment Related Services

6. Smt. Nirmala Sitharaman holds Pre-Budget consultation with Finance Ministers of State/UTs

Notifications

Companies Law

1. G.S.R. 930 (E) - dated 3-12-2019 - Co. Law

Corrigendum - Notification No. G.S.R. 382(E), dated 30.03.2016

DGFT

2. 36/2015-2020 - dated 18-12-2019 - FTP

Amendment in import policy conditions of gold and silver under Chapter 71 of ITC (HS), 2017, Schedule - I (Import Policy)

GST - States

3. 54/2018–State Tax - dated 12-12-2019 - Delhi SGST

Delhi Goods and Services Tax (Twelfth Amendment) Rules, 2018

4. 41/2019–State Tax - dated 12-12-2019 - Delhi SGST

Waive the late fees in certain cases for the month of July, 2019 for FORM GSTR-1 and GSTR-6 provided the said returns are furnished by 20-09-2019

5. 38/2019- State Tax - dated 12-12-2019 - Delhi SGST

Waive filing of Form GST ITC-04 - job-worker for F.Y. 2017-18 & 2018-19

6. 17/2019–State Tax (Rate) - dated 12-12-2019 - Delhi SGST

Seeks to amend Notification No. 26/2018-State Tax (Rate), dated the 03rd September, 2019

7. 26/2019- State Tax (Rate) - dated 2-12-2019 - Tripura SGST

Seeks to insert Explanation in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017

8. F.1-11(91)-TAX/GST/2019(Part) - dated 11-11-2019 - Tripura SGST

Amendment in Notification No. F.1-11(91)TAX/GST/2019, dated the 25th April, 2019

9. F.1-11(91)-TAX/GST/2019(Part-III) - dated 25-10-2019 - Tripura SGST

Seek to prescribed due date for furnishing of returns in form GSTR-3B for the month of OCT, 2019 to March 2020

10. F.1-11(91)-TAX/GST/2019(Part-III) - dated 25-10-2019 - Tripura SGST

Prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters from October, 2019 to March, 2020

SEZ

11. S.O. 4452(E) - dated 9-12-2019 - SEZ

Central Government notifies the 50.491 hectares area and constitutes a Approval Committee at Vallur & Edyanchavadi Villages in Ponneri Taluk, Thiruvallur District, in the State of Tamil Nadu

Circulars / Instructions / Orders

DGFT

1. 48/2015-2020 - dated 18-12-2019

Amendments in Para 4.68 (a) of the Handbook of Procedures 2015-20

Customs

2. PUBLIC NOTICE No.:- 29/2019 - dated 26-11-2019

First time importers, verification of documents

Highlights / Catch Notes

GST

• GST Council Analyzes Revenue Trends Since GST Implementation, Focuses on Revenue Patterns and Related Issues.

  News : The revenue trends since inception of GST - A presentation was made to the GST Council on the issue of revenue
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• GST Council's 38th Meeting: Adjustments to Tax Rates and New Exemptions to Streamline GST Framework and Address Concerns.

  News : GST Council decisions relating to changes in GST rates, exemptions in the 38th meeting held on 18th December, 2019 of the GST Council
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• GST Council's 38th Meeting: Key Updates to Streamline Law and Procedure for Better Compliance and Efficiency.

  News : GST Council’s decisions regarding Law and Procedure related changes - Recommendations of the GST Council in the 38th meeting of the GST Council held on 18.12.2019
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• High Courts Approve Rectification of Errors in GST TRAN-1 Form; Submission Deadline Set for October 15, 2019.

  Case-Laws - HC : Rectification of error in Form GST TRAN-1 - The learned Single Judge and the various High Courts have passed orders granting permission to either submit Form GST TRAN-1 electronically by opening the online portal for that purposes or allowing the petitioner to tender form manually on or before 15th October 2019. - No illegality has been committed by the learned Single Judge.
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• GST Interest Recovery Dispute: Fair Hearing Principle Invoked u/s 50; Authorities Must Consider Appellant's Submissions First.

  Case-Laws - HC : Recovery of the amount of interest due - Section 50 of GST - when the appellant/petitioner had raised contentions refuting their liability for payment of interest as calculated by the respondent, the theory of audi alteram partem will come into play - Revenue directed to consider the representation and submissions.
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• Appeal Pending? Goods Still Need Security to Avoid Confiscation u/s 130 of the CGST Act.

  Case-Laws - HC : Mere pendency of an appeal cannot be the basis for a direction to release the goods without any security, since the non payment of the security in respect of the goods can independently lead to a confiscation of the goods under Section 130 of the CGST Act.
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Income Tax

• Primary Agricultural Credit Societies get tax exemption on interest from Co-op Banks, not Treasury, u/s 194A(3)(iii)(v).

  Case-Laws - HC : Benefit of exemption u/s 194A(3)(iii)(a) on interest by the CO-OPERATIVE BANK to the Primary Agricultural Credit Societies - in the case of deposits made by the petitioner societies with the Co-operative Banks, they would be entitled to the benefit of exemption under Section 194A(3)(iii)(v) and, in respect of the deposits made by the petitioner societies with the Treasury, they will not be entitled to the benefit of exemption under Section 194A(3)(iii)(a)
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• Income Tax Appeal: Section 68 Addition Modified to Section 69 for Loan Repayment; Assessee Meets Burden of Proof.

  Case-Laws - AT : Addition u/s.68 - CIT(A) has changed the addition to section 69 - when the assessee has repaid the loans by cheques which has in cash to the respective parties, and the assessee has furnished complete details and address, and thus the assessee has discharged the onus u/s.68 of the Act, hence addition is not sustainable in law.
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• Assessing Officer's Addition on Cash Payments Unfounded When Sale Deeds Acknowledge Transaction and Consideration u/s 69B.

  Case-Laws - AT : Unexplained investment - when the transaction of sale of land and sale consideration is accepted by the AO of the seller as recorded in the sale deeds then the addition made by the AO on account of cash payment by the assessees U/s 69B of the Act has no legs to stand.
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• Survey u/s 133A Reveals "Dumb Documents"; Insufficient Evidence for Income Addition u/s 292C.

  Case-Laws - AT : Addition on the basis of loose paper - resumption u/s 292C - undisclosed income - survey u/s 133A carried out by the Department on the business premises of the assessee - the printouts are dumb documents and no cognizance of the same can be taken for making addition.
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• ESOP Share Sale Gains Taxed as Capital Gains, Not Income from Other Sources, u/s 56(2)(vii) of Income Tax Act.

  Case-Laws - AT : Sale of shares allotted to the assessee under employee stock option plan[ ESOP] and taking the sale value above fair market value as income from other source u/s 56 (2) (vii) - there is no transfer of any controlling interest - assessee has sold the shares and has not received any other property - AO directed to tax gain arising on the sale of about shares under the head capital gain only.
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• Unexplained Purchases u/s 69C: Transactions with Dubious Supplier Deemed Paper-Based, Lacking Substantial Evidence.

  Case-Laws - AT : Addition u/s 69C - unexplained purchases calculated on the basis of peak credit - The transactions reported by the assessee from the tainted supplier and the payment through banking channels could not be held to be more than paper transactions.
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• Bona Fide Purchaser Rights Under PBPT Act Section 27(2) Affirmed; No Shared Management or Shareholding Evidence Found.

  Case-Laws - AT : Benami Property - Rights of a bona-fide purchaser - section 27(2) of the PBPT Act, 1988 - At the time of execution of the Agreement to Sale on 18.03.2013, there was no common director in the two entities - Thus, the allegation made by the respondent of common management/shareholding factually has no substance.
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• Expenses for Medical Books and Brand Reminders Disallowed as Advertising; Violates Indian Medical Council Guidelines.

  Case-Laws - AT : Disallowance of expenses on brand reminders and expenses incurred on purchase of medical books and journals provided to HealthCare Professionals ('HCPs') - violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) - Once it is found that the expenditure is in the nature of advertisement expenditure, the question raised by the Assessing Officer loses significance.
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Customs

• First-time importers must submit KYC documents for verification to comply with customs regulations and ensure smooth transactions.

  Circulars : First time importers, verification of documents - submission of KYC documents and procedure to be followed
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• Customs Officer Misconduct: Tribunal Upholds Quashing of Action Due to Unexplained Delay in Preliminary Enquiry.

  Case-Laws - HC : Misconduct of Inspector / officer of customs - Misdeclaration of goods - evasion of customs duty - n inordinate unexplained delay itself causes prejudice to an accused employee - In each of the present cases there was no valid explanation for the inordinate delay in initiating the preliminary enquiry. - Order of CAT quashing the MoC upheld.
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• Revenue Lacks Grounds to Reject Transaction Value of Obsolete Aircraft Used for AME Studies Despite Being Junk.

  Case-Laws - AT : Valuation of imported goods - import of old and obsolete Aircraft - There are no reason for the Revenue to reject this transaction value - further, these aircrafts imported by the appellant is a junk and unworthy but useful for school of AME studies and there is not enough avionic equipments.
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• Imported Dairy Machinery Classified as Dairy Product Machinery Under Tariff CTH 8434 2000.

  Case-Laws - AT : Classification of imported goods - dairy machinery including the packing machine - the machinery in question is an integrated plant and is to be classified as Dairy Product and classifiable under CTH 8434 2000
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• Re-imported goods for repair lose exemption if activity qualifies as manufacturing, per relevant notification.

  Case-Laws - AT : Benefit of exemption - re-import of goods for repair or reconditioning - when the goods are reimported for an activity which amounts to manufacture, such re-importation will not fall under the impugned notification. Therefore, the exemption benefit of the notification cannot be extended to the appellant.
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DGFT

• DGFT Amends Import Policy for Gold and Silver under Chapter 71 of ITC (HS) 2017 to Reflect Market Conditions.

  Notifications : Amendment in import policy conditions of gold and silver under Chapter 71 of ITC (HS), 2017, Schedule - I (Import Policy)
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Indian Laws

• Summons Quashed: Petitioner Not Notified in Cheque Dishonor Case u/s 138 of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - section 138 of Negotiable Instruments Act - Complaint against the petitioner who is neither a Director or Party to the agreement - notice raising demand for payment has not been issued to petitioner by the complainant - the summons and proceedings against the petitioner are vitiated and the same deserve to be quashed
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SEBI

• SEBI Act Lacks Provisions for Recovery from Deceased Individuals' Legal Representatives, Halting Proceedings.

  Case-Laws - AT : SEBI Act and its Regulations does not contain any provision to continue recovery proceedings against the legal representative of the deceased. So long as there is no separate machinery to proceed against the legal representative, the cause of action comes to an end and recovery proceedings could no longer continue.
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Service Tax

• Agricultural Produce Storage Services Exempt from Service Tax Under Entry 66D(v) of the Negative List.

  Case-Laws - AT : Classification of services - storage and warehousing services of the agricultural produce - the services being rendered by the appellant would be more appropriately covered under the category of the services which are under the negative list vide entry no. 66D(v)
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• Refund Process Required for GTA Services in Export: Initial Service Tax Payment Mandatory Under Exemption Notification 41/2007.

  Case-Laws - AT : Benefit of exemption notification 41/2007 - use of GTA Service fir export of goods - this exemption is available by way of refund and not at the source. This does not automatically allow the appellant to NOT pay service tax which they were liable to pay - benefit of notification cannot be extended.
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VAT

• Dealers Cannot Claim Input Tax Credit on VAT Form 240 Without Required Return Submission, Must Follow Statutory Procedures.

  Case-Laws - HC : Input tax credit - The registered dealers are not permitted to claim the input tax credit on the basis of the VAT Form 240 without filing the return. When the statutory provision mandates compliance in a particular manner, it should be done in that particular way alone not by any other method.
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• State Tax Department Circular on Amnesty Scheme Must Align with Statutory Provisions, No Extra Interpretation Needed.

  Case-Laws - HC : Amnesty Scheme - a Circular by the Tax Department of the State cannot go beyond the statutory provisions under the guise of clarifying the scope of the statutory provisions, which are quite unambiguous and do not require any clarification
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Case Laws:

• GST

• 2019 (12) TMI 782
  Prayer for reopening of portal for filing of GST TRAN-01 - transitional credit - HELD THAT:- In view of the order passed by this Court in M/S ASIAD PAINTS LIMITED, VERTIV ENERGY PVT. LTD., M/S. WEIWO COMMUNICATION PVT. LTD. AND ORS. VERSUS UNION OF INDIA, GOODS AND SERVICE TAX NETWORK, THE COMMISSIONER OF COMMERCIAL TAXES (GST) , THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [ 2019 (12) TMI 464 - KARNATAKA HIGH COURT] , whereby this Court has extended the period to file/revise the TRAN-1 by the registered persons under the GST Act, 2017 by 31.12.2019. Thus, the petitioner is entitled to avail the said extended period - petition disposed off.

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• 2019 (12) TMI 781
  Prayer for reopening of portal for filing of GST TRAN-01 - transitional credit - HELD THAT:- In view of the order passed by this Court in M/S ASIAD PAINTS LIMITED, VERTIV ENERGY PVT. LTD., M/S. WEIWO COMMUNICATION PVT. LTD. AND ORS. VERSUS UNION OF INDIA, GOODS AND SERVICE TAX NETWORK, THE COMMISSIONER OF COMMERCIAL TAXES (GST) , THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [ 2019 (12) TMI 464 - KARNATAKA HIGH COURT] , whereby this Court has extended the period to file/revise the TRAN-1 by the registered persons under the GST Act, 2017 by 31.12.2019. Thus, the petitioner is entitled to avail the said extended period. Petition disposed off.

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• 2019 (12) TMI 780
  Rectification of error in Form GST TRAN-1 - due date for filing of Form GST TRAN-2 - Rule 117 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- There is no dispute that Form GST TRAN-1 was submitted by the first respondent and there was a bona fide error committed by the first respondent by not incorporating the quantity of goods held in stock in Column 7B of the prescribed form. On 7th March 2018, a notification was issued by the Central Board of Excise and Customs by which the Central Goods and Services Tax (Second Amendment) Rules, 2018 were published which enabled a registered person to submit a statement in Form GST TRAN-2 by 31st March 2018 or within such extended period as may be decided by the Commissioner. Accordingly, the first respondent attempted to file TRAN-2 which could not be filed due to an error generated as a result of the failure of the first respondent to incorporate the quantity of goods held in stock in Column 7B of Form GST TRAN-1. There is no dispute that there was a bona fide mistake committed by the first respondent while filling Form GST TRAN-1 in early days of GST regime. This is a case where in very early days of implementation of GST, one column was inadvertently not filled in Form GST TRAN-1. The Form GST TRAN-1 was filed within the time stipulated by law. The learned Single Judge and the various High Courts have passed orders granting permission to either submit Form GST TRAN-1 electronically by opening the online portal for that purposes or allowing the petitioner to tender form manually on or before 15th October 2019. This was done as the Form GST TRAN-2 could not be filed as there was an inadvertent omission in one column by failing to mention the quantity of goods held in stock. No illegality has been committed by the learned Single Judge while passing the impugned order - appeal dismissed.

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• 2019 (12) TMI 779
  Recovery of the amount of interest due - Section 50 of the Central Goods and Services Tax Act, 2017 - garnishee proceedings initiated under Section 79 (1) (c) of the said Act - HELD THAT:- Prima facie we were not at all convinced that there existed any legal ground to interfere with the impugned order passed by the learned Single Judge. But learned counsel for the appellant/petitioner had pointed that, Ext.P20 notice was issued under Section 79 without adverting to the contentions raised against Ext.P16 notice through Exts.P18 and P19 reply submitted by the petitioner to respondents 1 2. Going by provisions contained in Section 50 of the CGST Act, we are of the opinion that the accrual of interest mentioned therein is automatic when the tax due as conceded in the return is not remitted along with the return. However, when the appellant/petitioner had raised contentions refuting their liability for payment of interest as calculated by the respondent, the theory of audi alteram partem will come into play. Therefore we are of the opinion that a direction to the 3rd respondent for consideration of Ext.P18 and P19, before proceeding with the coercive steps, would suffice to meet the ends of justice. Both the writ appeal as well as the writ petition are hereby disposed of by directing the 3rd respondent to consider Ext.P18 and P19 objections filed by the petitioner against the proposal intimated in Ext.P16, after affording an opportunity of personal hearing to the petitioner or to his representative.

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• 2019 (12) TMI 778
  Pre-condition for maintainability of appeal - release of confiscated goods - HELD THAT:- Mere pendency of an appeal cannot be the basis for a direction to release the goods without any security, since the non payment of the security in respect of the goods can independently lead to a confiscation of the goods under Section 130 of the CGST Act. The writ petition is disposed off by directing the 2nd respondent to consider and pass orders on Ext.P5 appeal within a period of three months from the date of receipt of a copy of this judgment, after hearing the petitioner.

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• 2019 (12) TMI 777
  Profiteering - purchase of flats - it is alleged that the Respondent had not passed on the benefit of input tax credit by way of commensurate reduction in price - contravention of Section 171 of the Central Goods and Services Tax Act, 2017 - penalty - HELD THAT:- The ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 3.17% and during the post-GST period from July, 2017 to December, 2018, it was 5.89% as per Table B supra and hence it is established that the Respondent has benefited from the benefit of additional ITC to the extent of 2.72% [5.89% (-) 3.17%] of the turnover. Since, the above computations made have been done on the basis of the Returns filed by the Respondent as well as the information supplied by him therefore, the same can be relied upon. It is also clear from the record that the Central Government, on the recommendation of the GST Council, had levied 18% GST effective rate of 12% in view of 113rd abatement on value on the construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which was reduced in the case of affordable housing from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. Accordingly, the DGAP has computed the profiteered amount by comparing the applicable tax rate and ITC available in the pre-GST period when only VAT@ 4.50% was payable with (1) the post-GST period from 01.07.2017 to 24.01.2018, when the effective GST rate was 12% and (2) with the GST period from 25.01.2018 to 31.12.2018, when the effective GST rate was 8% - Since, the calculations have been prepared on the basis of the information reflected in the Returns filed by the above Respondent and the details submitted by him hence, the computations made are taken to be correct and accordingly the profiteered amount is determined as Rs. 2,58,80,927/- as per the details mentioned above in terms of the provisions of Rule 133 (1) of the CGST Rules, 2017. 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 as has been mentioned in detail if the preceding paras of this Order. As per the provisions of Rule 133 (1) (b) of the CGST Rules, 2017, it is further ordered that the Respondent shall refund the above profiteered amount to the flat buyers as per the details given by the DGAP in Annexure-12 without taking in to account the benefit which he has claimed to have passed on. However, no benefit is to be passed on to the Applicant No. 1 as he had not bought any flat or commercial shop in the Respondent s present project. Penalty - HELD THAT:- Respondent has denied benefit of ITC to the buyers of the flats and the shops being constructed by him in his Project Orchard Avenue 93 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 under the provisions of the above Section - 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. Application disposed off.

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• Income Tax

• 2019 (12) TMI 776
  Dismissal of appeal for non prosecution - HELD THAT:- Matter was listed on 08.11.2019. This Court passed the following order: Two weeks time is granted to Ld. counsel for the appellant to file the affidavit of valuation and deficit court fee. The office report indicates that the appellant has not filed the affidavit of valuation and deficit court fee so far. Further four weeks time is granted to the appellant to file affidavit of valuation and deficit court fee. Failing to file the same, the Appeal shall stand dismissed for non-prosecution.

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• 2019 (12) TMI 775
  Benefit of exemption u/s 194A(3)(iii)(a) on interest by the CO-OPERATIVE BANK to the Primary Agricultural Credit Societies - HELD THAT:- Requirement of deduction of tax at source does not prejudice the writ petitioner assessee, since the tax amounts deducted at source from the payments effected to the petitioner societies would be credited to their account with the Income Tax Department, and adjusted towards any tax liability determined against them in their assessment for the respective years. In the event the petitioner societies succeed in establishing before the Income Tax authorities that they do not have any income liable to tax under the Act, then they would be entitled to a refund of the tax amounts so deducted pursuant to a finalization of their assessments under the Income Tax Act. Alternatively, the petitioners societies also have the option of approaching the Income Tax Department for a certificate u/s 197. Stating that, in view of their non-liability to tax under the Act, there need be no deduction of tax effected at the time of making payments to them. This aspect has been made clear in the circular of the Treasury department impugned in these writ petitions. In the result, these writ petitions are disposed by declaring that, in the case of deposits made by the petitioner societies with the Co-operative Banks, they would be entitled to the benefit of exemption under Section 194A(3)(iii)(v) and, in respect of the deposits made by the petitioner societies with the Treasury, they will not be entitled to the benefit of exemption under Section 194A(3)(iii)(a)

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• 2019 (12) TMI 774
  Depreciation on wind mills which was not actually put to use - HELD THAT:- ITAT held that prior to introduction of new concept of block of assets with effect from 01.04.1988, the depreciation used to be claimed separately on each asset. The legislature found that this was a cumbersome procedure leading to various difficulties and therefore, the concept of block of assets was introduced. It is further been held that the concept of block of assets as reflected in the Central Board of Direct Taxes dated 23.09.1986 that once the various assets are clubbed together, they become block assets within the meaning of Section 2(11) of the Act and it becomes one asset and every time new asset is acquired, it is thrown into common hotchpotch i.e., block of asset on meeting the requirement of depreciation being allowable at the same rate. It is further been held that the individual asset meet their identity and become a new separate part of block of asset, insofar as calculation of depreciation is concerned. Income Tax Appellate Tribunal has held that the assessee is entitled to claim depreciation on the value of wind mills. We are in agreement with the view taken by the Income Tax Appellate Tribunal for the reasons which we have mentioned supra. Accordingly, the first substantial question of law is answered in the affirmative and in favour of the assessee and against the revenue.

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• 2019 (12) TMI 773
  Penalty u/s 271(1)(c) - HELD THAT:- Disallowance made under Section 14-A of the Act and re-computation of deduction under Sections 10-A and 10-AA of the Act by recalling the original order and the same is pending adjudication before the Tribunal. The petitioner has filed an appeal against the order of penalty impugned herein and the said appeal is also pending consideration before the Appellate Authority. It is well settled law that the penalty is not automatic. In such circumstances, it was obligatory on the part of the Assessing Officer to consider the application of the petitioner staying the demand of penalty subject to the decision of the Tribunal/Appellate Authority. The same having been rejected, this Court deems it appropriate to direct the respondents not to enforce the demand relating to the penalty amount under the demand notice dated 23.4.2019 issued by the respondent No.1 under Section 156 relating to the assessment year in question until disposal of the proceedings pending before the Tribunal or the Appellate Authority challenging the order passed under Section 271(1)(c) of the Act, whichever is earlier and is ordered accordingly.

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• 2019 (12) TMI 772
  Disallowance of interest expenditure u/s 14A - HELD THAT:- Reserve and surplus available with the assessee as on 31.03.2010 at Rs. 1000.63 Crores was much more than this tax-exempt investments of the assessee company. In the light of these facts, now we examine the applicability of the judgment of Hon ble Karnataka High Court rendered in the case of CIT Vs. Microlabs [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] on which reliance has been placed by assessee. In this case, Hon ble Karnataka High Court has followed the judgment rendered in the case of CIT Vs. HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] wherein it was held that when investments are made out of common pool of funds and non interest bearing funds were more than the investments in tax free securities, no disallowance of interest expenditure u/s 14A can be made. Disallowance of the net Aircraft expenditure - HELD THAT:- A categorical finding has been given by the CIT(A) in his order that the assessee satisfies both the conditions and on this basis, it was held by him that the assessee is eligible for depreciation on the Aircraft. He has further noted that the Aircraft was acquired to run it on hire and air craft charges are in fact received and, on this basis, he decided that depreciation on Aircraft of Rs. 2100,08,528/- is allowed. We find that there is no dispute that an amount of Rs. 269,80,969/- was earned by the assessee towards aircraft hire charges and the expenses claimed by the assessee of Rs. 1983.43 lakhs is after reducing the charges received by the assessee of Rs. 269.81 lakhs. Under these facts, we find no infirmity in the order of the CIT(A) as per which it was held by him that the expenses on aircraft including depreciation is allowable. Section u/s 14A disallowance - HELD THAT:- This is the main claim of the assessee before CIT(A) that the assessee is a registered NBFC and the main business of the assessee is to lend money and to invest in equity shares of various companies. It is also claimed before the CIT(A) that the assessee has earned interest income of about Rs. 41 Crores and the assessee has a share capital reserve of Rs. 1001 Crores. Out of this capital and reserve of Rs. 1000.63 Crores, if we reduce investment in shares considered for 14A disallowance of Rs. 313.11 Crores as on 31.03.2010, then also, surplus amount of approx. Rs. 688 Crores remains to take care of share application money given by the assessee of Rs. 65.22 Crores. By following the same judgment of rendered in the case of CIT Vs. Microlabs [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] we hold that no disallowance is called for in respect of investment by way of share application money

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• 2019 (12) TMI 771
  Revision u/s 263 - G.P. shown at 4.68% on sales made in individual capacity should have been considered for G.P. in the case of the partnership firm (assessee under consideration) - HELD THAT:- It is a settled position in law that provisions of section 263 do not permit substituting one opinion by another opinion. The order of the PCIT cannot be sustained on the principle of erroneous nature of the order of the A.O. as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the AO that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to the interests of revenue. Hence, we are of the view that revisionary jurisdiction exercised by the PCIT u/s. 263 was not in tune with the facts and evidences on record duly explained to the A.O. and verified by him in detail, that being so the order passed u/s. 263 on such erroneous stand is liable to be quashed. We accordingly quash the order u/s 263 of the Act and allow the appeal of the assessee. Second point in the impugned notice u/s.263 was to the direction that addition of peak credit on the basis of the bank account has not been considered in the impugned reassessment order. As stated above, the said peak credit was assumed on the basis of deposits in April,2007 in Axis Bank maintained by the assessee-firm. It is pertinent to note that the said peak credit was originally added in the individual assessment of Sri Jabibur Rahaman for the impugned assessment year solely on the ground that the Bank account with Axis Bank had not been disclosed in his ROI. The Hon ble Tribunal on the basis of the finding that the same was not related to the individual but belonged to the partnership firm, in which the said individual is a partner, deleted the addition and the same was directed to be considered in the case of the assessment of the partnership firm. Evident that the addition of peak credit in the guise of undisclosed income was made for not disclosing the Axis Bank Account in the ROI, but when the said Bank Account admittedly stood declared in the ROI of the partnership firm for the impugned assessment year and accounted for in the audited books of account, the addition on the basis of earlier stand of undisclosed income does not survive on facts and in law. Since, in para No.12 of our order, we have quashed the order of PCIT, and the second point in the impugned notice u/s.263 is consequential in nature, therefore does not require adjudication. - Appeal of the assessee is allowed.

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• 2019 (12) TMI 770
  Disallowance of written off depreciated investments - HELD THAT:- Because of the restrictions contained in section 44 read with Rule 5 of the First Schedule, there could not be any disallowance of the amount written off out of investments and, accordingly, the disallowance is deleted Disallowance of Amortisation of Premium paid on Purchase of Investments - HELD THAT:- As relying on assessee s own case [ 2019 (6) TMI 84 - ITAT KOLKATA] CIT(A) has not erred on the facts of the case and in law in holding that a sum being amortization of premium paid on purchase of investments is an allowable deduction while computing the income. Addition towards Reserve created for Unexpired risk u/s 115JB - HELD THAT:- As relying on assessee s own case [ 2019 (6) TMI 84 - ITAT KOLKATA] Reserve created for unexpired risk need not be added back for the purpose of computation of book profits u/s 115JB Disallowance u/s 14A while computing the book profit of the assessee company u/s 115JB - HELD THAT:- Rule 8D could be invoked only for making a disallowance u/s 14A while computing the income of the assessee under the normal provisions of the Act and not for computation of book profit u/s 115JB of the Act. It was further held that unless an item is debited in the profit and loss account, the same could not be the subject matter of addition to book profits under clause (f) of Explanation to section 115JB of the Act and it is only the actual expenditure incurred by the assessee in relation to the exempt income, which is debited to the profit and loss account, can be added. In the present case, the assessee company had already disallowed expenses incurred in relation to the exempt income suo moto and keeping in view the same, we do not find any infirmity in the impugned order of the Ld. CIT(A) deleting the further disallowance made by the A.O. u/s 14A by applying Rule 8D while computing the book profit of the assessee company u/s 115JB of the Act. Ground of the Revenue s appeal is accordingly dismissed.

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• 2019 (12) TMI 769
  Service PE in India - Royalty - attribution of profit - AO has erred in holding that Appellant has a service Permanent Establishment ( PE ) in India within the meaning of Article 5 of India UK Double Taxation Avoidance Agreement ( DTAA ) - Whether Appellant has a service PE in India under Article 5(2)(k) of the DTAA? - HELD THAT:- Following the decision in own case [ 2018 (9) TMI 961 - ITAT DELHI] , decided in favor of assessee.

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• 2019 (12) TMI 768
  Addition of the fixed conveyance allowance - disallowance on account of non-availability of the supporting evidences - HELD THAT:- As there was no representation from the side of the learned AR for the assessee qua the disallowances made by the authorities below against the fixed conveyance allowance received by the assessee from LIC, we do not find any infirmity in the order of the authorities below. Indeed, the onus lies on the assessee to furnish the details of the expenses incurred by him against the fixed conveyance allowance received from LIC. Hence, in the absence of the documentary evidence, the ground of appeal of the assessee is dismissed. Unexplained household expenses - HELD THAT:- We note that the AO has made the addition on the basis of the guesswork. In fact, the AO has not brought anything on record about the actual expenses incurred by the assessee with respect to the telephone, mobile, electricity, education of his daughter etc. it is the settled law that there cannot be any addition based on guess work despite how strong the guesswork is. In the case on hand, the reasoning given by the AO for making the impugned addition appears to be strong and reasonable but the same is not supported on the basis of documentary evidence. Therefore we are of the view that no such addition is warranted in the given facts and circumstances. Hence, the ground of appeal of the assessee is allowed. Profit with respect to share trading activities - HELD THAT:- AR at the time of hearing has not made any representation in the written submission filed before us. As there was no representation from the side of the learned AR for the assessee qua the addition made by the authorities below against the share trading transactions, we do not find any infirmity in the order of the authorities below. Indeed, the onus lies on the assessee to furnish the details of the profit earned by him against the share trading transactions. Hence, in the absence of the documentary evidence, the ground of appeal of the assessee is dismissed. Disallowance for the expenditures incurred against the incentive bonus - HELD THAT:- AR at the time of hearing has not made any submission in the written submission filed before us. As there was no representation from the side of the learned AR for the assessee qua the disallowances made by the authorities below against the incentive bonus received by the assessee from LIC, we do not find any infirmity in the order of the authorities below. We also note that there is no provision under the Act authorizing the assessee to claim the deduction against the incentive bonus which is part of the salary as provided under section 17 of the Act. Deduction u/s 80 G for the amount of donation paid to Shri Lalpur Gau Rakshak Mandal for Rs.3000.00 only - same was disallowed by the AO in the absence of any documentary evidence - HELD THAT:- The assessee has not preferred an appeal to the learned CIT (A) against the non-disallowance of deduction for the donation paid under section 80G of the Act. However, the assessee in the ground of appeal has raised the issue before us 1st time. This is also pertinent to note that the assessee or his authorized representative has not made any representation against the ground of appeal raised by the assessee as discussed above. Thus, in the absence of any representation the ground of appeal of the assessee is dismissed.

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• 2019 (12) TMI 767
  Eligibility of deduction u/s 80P - HELD THAT:- Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [2019 (3) TMI 1580 - 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 AO. 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. As regards the 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, AO shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court 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 766
  Reopening of the assessment by issuance of notice u/s 148 - Bogus purchases - HELD THAT:- In terms of quantity, the purchases and sales have not been disputed. Only thing disputed by the Revenue is part purchases from the alleged total sales were treated as bogus. It can be examined with a simple example. That the assessee has purchased material from party A ; obtain bills from party B . Since he has not able to prove the purchases from B , therefore, the purchases have been treated as bogus. In fact, the material was received by the assessee. If that thing has not been happened, then sales would not have been achieved. Therefore, in these circumstances, only extra element of profit involved in this modus operandi of purchases of goods from party A and obtaining bills from B is to be worked for treating the income of the assessee. The assessee has already shown gross profit at 7.25% and 7.14%. If extra profit at the rate of 6% is being estimated qua the alleged purchases of Rs. 59,09,015/- and Rs. 26,15,013/- in the AY 2009-10 and 2010-11, then ends of justice would meet. This 6% we have worked out on the basis of our past experience in dealing with such cases, wherein Hon ble Gujarat High Court has also upheld estimation of profit ranging between 5% to 20% depending on the nature of business and considering undue profit earned by an assessee.

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• 2019 (12) TMI 765
  Addition u/s.68 - CIT(A) has changed the addition to section 69 - HELD THAT: In the case of Andaman Timber Industries v. CCE [ 2015 (10) TMI 442 - SUPREME COURT] wherein it was held that not allowing the assessee to cross-examination witnesses by taxing authority, though subsequent of those statements were made basis of the impugned order amounts to a serious flaw which makes impugned order nullity in as much as it amounted to violation of principles of natural justice. Though the CIT(A) by not allowing opportunity to the assessee cross-examination as violated the principles of natural justice. We further observe that the addition is not sustainable u/s.69. We further observed that the assessee has repaid all the loans to the lenders in the subsequent year through cheque which has been appeared in their bank account also therefore when the assessee has repaid the loans by cheques which has in cash to the respective parties, and the assessee has furnished complete details and address, and thus the assessee has discharged the onus u/s.68 of the Act, hence addition is not sustainable in law. The addition sustained by the CIT(A), by u/s.69 is not found sustainable in the law. Accordingly, the same is directed to be deleted. Accordingly, these grounds of appeals are allowed.

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• 2019 (12) TMI 764
  Unexplained cash credit u/s 68 - Penalty under section 271(1)(c) - HELD THAT:- The non cooperation of the lenders in the enquiry conducted may be for various reasons. While confirming the addition in the quantum proceedings, one has to look at whether the ingredients of section 68 of the Act are established or not. Once the Appellate Authority on the basis of facts on record concludes that either the identity of the creditor or the genuineness of the loan transaction or the creditworthiness of the creditors are not established, addition can be made under section 68. The aforesaid finding has to be on the basis of facts/evidences brought on record during assessment proceeding. However, imposition of penalty under section 271(1)(c) is an independent proceeding wherein assessee s explanation qua the charge brought against him has to be evaluated afresh in the context of materials on record. In the facts of the present case, the assessee did furnish necessary information with some supporting evidence in respect of loan received from 22 creditors aggregating to Rs. 39,38,000. Therefore assessee cannot be accused of furnishing inaccurate particulars of income or concealing income to that extent. Therefore, imposition of penalty on the addition and the corresponding interest thereon deserves to be deleted.

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• 2019 (12) TMI 763
  Addition on account of alleged on money received on sale of flats - HELD THAT:- Addition made by the Assessing Officer on account of on money is purely on ad hoc/estimate basis without having any nexus with any incriminating material brought on record. Merely relying upon the statements recorded under section 132(4) which were subsequently retracted, no addition can be made purely on presumption and surmises without any corroborative evidence to follow up the statements recorded under section 132(4). As rightly observed by Commissioner (Appeals), undisclosed income declared at the time of search has already been offered by the assessee in the return of income filed for the assessment year 2011 12. Therefore, if the AO wanted to make any addition on account of on money in the impugned assessment year, he should have brought evidence on record to back his conclusion. The incriminating material referred to by him for making the addition in no way is connected with the assessee. Therefore, it cannot form the basis for making the addition. Therefore, on consideration of overall facts and circumstances of the case and keeping in view the decision of the Tribunal referred to above, we do not find any infirmity in the order of learned Commissioner (Appeals). - Revenue s appeal is dismissed.

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• 2019 (12) TMI 762
  Disallowance of deduction claimed u/s 54/54F - since the flat transferred by the assessee was a residential property, claim of deduction under section 54F is not allowable - HELD THAT:- Merely because the assessee has claimed deduction under section 54F of the Act, by treating the flat as a commercial property, assessee s claim of deduction under section 54 of the Act cannot be disallowed if the assessee fulfills the conditions of section 54. In the facts of the present case, the Departmental Authorities have no doubt that the flat transferred by the assessee is a residential flat and on re development the assessee has also received a residential flat. That being the case, the assessee is certainly entitled for deduction under section 54 of the Act. Merely because the assessee claimed a deduction under the wrong provision, his claim cannot be disallowed if it is allowable under a different provision. While admitting the additional ground raised by the assessee being purely a legal ground which can be decided without requiring investigation into fresh facts, we direct the AO to allow assessee s claim of deduction under section 54 of the Act in respect of the second flat. Additional grounds are allowed. Consequently, the ground raised by the assessee claiming deduction under section 54F of the Act having become redundant is dismissed.

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• 2019 (12) TMI 761
  Income from house property - Computation of ALV of the office premises at Balaji Bhavan when the premises were as lying vacant - HELD THAT:- As observed that though the benefit of computing the ALV u/s 23(1)(c) could not be extended to a case where the property was not let out at all, however the same would duly encompass and take within its sweep cases where the property had remained let out for two or more years, but had remained vacant for the whole of the previous year. When in the case of the present assessee the property under consideration had remained let out for a period of 36 months, and thereafter though could not be let out and had remained vacant during whole of the year under consideration, but had never remained under the self occupation of the assessee, thus, no infirmity emerges from the computation of the annual value of the said property under Sec. 23(1)(c) by the assessee. Ground of appeal No. 1 and 2 of the assessee are allowed and the determination of the annual value of the property under consideration viz. Unit No. 401 425 of project Balaji Bhavan by the A.O by taking recourse to Sec. 23(1)(a), which thereafter was sustained by the CIT(A), is vacated.

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• 2019 (12) TMI 760
  Validity of assessment - HELD THAT:- We find that the assessee submitted that the assessment order might have passed in the month of January, 2011, with an ante-date, but, there is no evidence to support his argument. We are of the view that there is no basis for the assessee to raise this ground and hence, the same is dismissed. Case was selected for scrutiny under CASS and not for any specific purpose. The AO has power under jurisdiction to scrutinize the entire of the assessee and, therefore, this ground of the assessee is dismissed. Short term capital gain on profit on shares - Period of holding - HELD THAT:- The assessee is buying shares and selling the same within 2 days for profit. All the shares in the above table except one scrip pertaining to EASUN Reyrol, which is purchased on 25/07/2007 and sold on the same day, the assessee purchased on 24/07/2007 and sold on 206/07/2007 i.e. within two days. Therefore, it is very much evident that the intention of the assessee is only to make the profit by buying and selling the shares in a systematic manner. The assessee did not hold any shares for a longer period that means, the assessee s intention is not at all earn dividend income, but, only he wanted to make profit. In the written submissions, the ld. counsel for the assessee relied on various case law as well as CBDT Circular No. 6 of 2016, dated 29/02/2016. In our view, the same are not relevant to the facts of the case of the assessee. Therefore, the revenue authorities treated the assessee as a trader and not an investor is proper and accordingly, we uphold the order of the CIT(A) and dismiss the ground raised by the assessee in this regard. Disallowance of expenses under the head conveyance travelling and vehicle maintenance - AO made the disallowance on the ground that some of the vouchers are self made and not supported by bills and disallowance was to the extent of 30% of the amounts under the said heads of expenses - HELD THAT:- AO made the disallowances @ 30% of the expenditure on the ground that the some of the vouchers submitted by the assessee are self-made vouchers. The CIT(A) restricted the disallowance to 15%. Therefore, we find no infirmity in the order of CIT(A) and therefore, the same is hereby upheld dismissing the ground raised by the assessee on this issue. Income from house property - HELD THAT:- Additional ground raised by the assessee is rejected in view of the fact that the CIT(A) has already adjudicated the same by remitting the same to the file of the AO. This ground is dismissed.

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• 2019 (12) TMI 759
  Disallowance of interest u/s.36(1)(iii) - interest paid on borrowed capital - HELD THAT:- Assets acquired by the assessee were only stock in trade and not any plant and machinery warranting installation of the same and correspondingly putting use of the same would require some time. From the list of assets taken over by the assessee as tabulated above, we find that even the fixed assets taken over by the assessee company comprised predominantly of Goodwill to the tune of Rs. 582.25 Crores and very miniscule operation of fixed assets of Rs. 1.27 Crores were taken over by the assessee which admittedly was paid out of equity funds and the borrowed funds were not utilized at all for the same. This fact is not controverted by the revenue before us. Hence, it could be safely concluded that the borrowed funds were used for acquiring only stock in trade by the assessee and hence, the same were meant only for the purpose of business of the assessee. Accordingly, the proviso to Section 36(1)(iii) of the Act would not come into operation at all. Once, the borrowing has been made for the purpose of business, interest paid thereon would become eligible for deduction u/s.36(1)(iii) Merely because the assessee company had not claimed any depreciation on Goodwill during the year under consideration, it would not make any difference or alternatively it would not change the character of the assets taken over by the assessee company which are purely in the form of liquid assets such as finance receivables, trade receivables and claims receivables thereby forming part of stock in trade of the assessee. We direct the ld. AO to grant deduction of interest paid on borrowed capital in the sum u/s.36(1)(iii) of the Act in the A.Y.2015-16. Accordingly, the ground raised by the assessee is allowed. Disallowance of expenses being the cost of arranger fees, credit rating fees and loan processing fees to obtain loan funds - HELD THAT:- There is no dispute that the entire payments were made by the assessee company in connection with raising loan funds for the purpose of business. As rightly observed by the assessee, the allowability of the expenses incurred for raising loan funds would not depend on the utilisation of the loan funds for the purpose of procured assets. What is to be seen is whether the loans have been borrowed for the purpose of business by the assessee. In the instant case, there is absolutely no dispute that the loans have been borrowed by the assessee for the purpose of its business. The expenses payments of Rs. 15.35 Crores are only payments made to various parties who had assisted in procuring those loans and loan processing fees paid to banks. Hence, this is linked with the liabilities i.e. loans borrowed by the assessee. We also find that the ld. CIT(A) has also placed reliance on the CBDT Circular No.56 dated 09/03/1971. Accordingly, the said expenses are squarely allowable as deduction - Grounds raised by the revenue are dismissed.

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• 2019 (12) TMI 758
  Claim of deduction u/s. 10B/10A - first appellate authority power to entertain a fresh claim of deduction not been made before the Assessing Officer - Whether deduction u/s. 10A shall not be admissible unless the assessee furnishes Form No. 56F along with the return of income and the report of an accountant as specified? - assessee made an alternative claim of deduction u/s.10A of the Act by filing a revised return but the same has not been entertained by the AO as there was no consistency in the claim of deduction and not supported by recognized certification - HELD THAT:- C IT(A) held that the assessee is eligible for deduction u/s. 10A of the Act and he relied on the judgment of the Delhi High Court in the case of CIT vs Technovate E Solutions P Ltd [ 2013 (3) TMI 372 - DELHI HIGH COURT] Considering the fact that the assessee itself had claimed two different amounts for the deduction to be allowed u/s 10A and the Assessing Officer also had mentioned in the remand report submitted about change in the turnover subsequent to the order passed u/s 263, the Assessing Officer was directed to work out the claim of deduction to be allowed u/s 10A afresh in accordance with the Act. Accordingly, the CIT(A) allowed the appeal of the assessee. Eligible for alternate claim of deduction u/s. 10A - No such claim was made by the appellant in the return of income filed and this was not raised as an additional ground/claim but as an alternative claim before the appellate authority, where as a claim for deduction u/s. 10B was already mad ein the return of income - HELD THAT:- As decided in M/S FLYTXT TECHNOLOGY P. LTD. [ 2017 (10) TMI 872 - KERALA HIGH COURT] no reason to think that the Tribunal has committed an illegality by directing the Assessing Officer to decide the matter afresh duly adverting to the claim of the assessee for the benefit of Section 10A. Ground relating to entertaining a new claim of deduction u/s. 10A - There is no bar to entertain such claim by the CIT(A) otherwise than by filing a revised return as held by the Supreme Court of India in the case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] Disallowance of interest on diverted fund - HELD THAT:- Even if disallowance is made towards notional interest on account of diversion of funds to the sister concerns, it is of no consequence since the assessee s income is exempted u/s. 10A of the I.T. Act.

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• 2019 (12) TMI 757
  Reopening of assessment u/s 147 - unexplained investment - cash payment by the assessee in respect of the land purchased by them - addition based on seized material - HELD THAT:- As perused the statements of Shri Madan Mohan Gupta as produced before us as per directions of the Bench to the Department as well as statements of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini and found that nothing incriminating has been stated in the statement of Shri Madan Mohan Gupta as well as in the statement of Saini brothers about the cash payment by the assessees in respect of the land purchased by them. Therefore, even if the seized material along with the statements of Shri Madan Mohan Gupta and Saini brothers are taken into consideration nothing has come out to be regarded as any incriminating material or fact to reveal any cash payments by the assessees for purchase of lands in question. The addition made by the AO is solely on his own presumption of payment of cash without any tangible material or evidence in support of his decision. When the seized material found from Shri Madan Mohan Gupta as well as other material gathered during post search inquiry has not established any direct or proxy connection with the transaction of purchase of land by the assessees then the assumption and presumption of the AO that the assessee might have paid cash over and above the consideration shown in the sale deeds is only surmises and conjectures. We note that the AO of the Saini brothers and father while framing the assessment U/s 144 r.w.s. 147 of the Act dated 18.03.2015 accepted the sale consideration as recorded in the sale deeds for the purpose of the assessing the capital gain. The AO however, made additions on account of unexplained investment by them on account of cash payment reflected in the seized material. AO has not disturbed the sale consideration received by Saini brothers and father in respect of sale of land to the assessees before us. The said finding of the AO in case of Saini brothers and father demolished the case of the AO presuming the payment of cash by the assessees before us for purchase the land from Saini family members. Accordingly, when the transaction of sale of land and sale consideration is accepted by the AO of the Saini family members as recorded in the sale deeds then the addition made by the AO on account of cash payment by the assessees U/s 69B of the Act has no legs to stand in the absence of any incriminating material but the said addition is merely based on assumption of the AO. Reopening after 4 years - no approval u/s 151 - absence of any valid sanction the notice issued u/s 148 - HELD THAT:- As perused the statements of Shri Madan Mohan Gupta as produced before us as per directions of the Bench to the Department as well as statements of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini and found that nothing incriminating has been stated in the statement of Shri Madan Mohan Gupta as well as in the statement of Saini brothers about the cash payment by the assessees in respect of the land purchased by them. Therefore, even if the seized material along with the statements of Shri Madan Mohan Gupta and Saini brothers are taken into consideration nothing has come out to be regarded as any incriminating material or fact to reveal any cash payments by the assessees for purchase of lands in question. The addition made by the AO is solely on his own presumption of payment of cash without any tangible material or evidence in support of his decision. When the seized material found from Shri Madan Mohan Gupta as well as other material gathered during post search inquiry has not established any direct or proxy connection with the transaction of purchase of land by the assessees then the assumption and presumption of the AO that the assessee might have paid cash over and above the consideration shown in the sale deeds is only surmises and conjectures. We note that the Assessing Officer of the Saini brothers and father while framing the assessment U/s 144 r.w.s. 147 of the Act dated 18.03.2015 accepted the sale consideration as recorded in the sale deeds for the purpose of the assessing the capital gain. AO made additions on account of unexplained investment by them on account of cash payment reflected in the seized material. AO has not disturbed the sale consideration received by Saini brothers and father in respect of sale of land to the assessees before us. The said finding of the Assessing Officer in case of Saini brothers and father demolished the case of the AO presuming the payment of cash by the assessee before us for purchase the land from Saini family members. Accordingly, when the transaction of sale of land and sale consideration is accepted by the AO of the Saini family members as recorded in the sale deeds then the addition made by the AO on account of cash payment by the assessees U/s 69B of the Act has no legs to stand in the absence of any incriminating material but the said addition is merely based on assumption of the AO. - Decided in favour of assessee.

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• 2019 (12) TMI 756
  Reopening of assessment u/s 147 - application of mind by concerned sanctioning authority u/s Section 151 - HELD THAT:- In the present case the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind by mentioning only that ON THE BASIS OF A ABOVE, I AM SATISFIED , in the Reasons for Initiating Proceedings u/s. 147 and For obtaining the Approval of the Addl. Commissioner of Income Tax, Range-23, New Delhi, a copy thereof is placed at page no. 1 of the Paper Book, and therefore, the legal issue in dispute is squarely covered by the aforesaid finding of the Tribunal, hence, respectfully following the aforesaid precedent i.e. Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided [ 2019 (8) TMI 1121 - ITAT DELHI] respectively relevant to assessment year 2011-12, the reassessment is hereby quashed - Decided in favour of assessee.

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• 2019 (12) TMI 755
  Revision u/s 263 - correctness of the claim of deduction u/s 80IB - case of the assessee was selected under CASS - whether the matter was selected for limited scrutiny or complete scrutiny ? - HELD THAT:- We find that firstly, there is no mention in the notice u/s 143(2) that the matter has been selected for limited scrutiny, secondly, along with notice u/s 142(1), a detailed questionnaire was issued by the AO on various issues emanating from the return of income filed by the assessee and the same have been responded by the assessee company from time to time. Had the case of the assessee being selected for limited scrutiny as so claimed by the ld AR, the questionnaire/inquiry/investigation would have been limited and restricted to such issues as also apparent from Instruction No. 5/2016 dated 14th July, 2016 issued by CBDT, which has been relied upon by the ld. AR and binding on the AO. We are therefore unable to agree with the contentions of AR that merely because in the initial show cause notice issued by the Pr. CIT., it has been stated that the case was selected for limited scrutiny, it should be accepted that the case of the assessee was selected for limited scrutiny in view of material facts, as we have noticed above, as emanating from the records which shows clearly that the case of the assessee was selected for complete scrutiny. Assessee having participated in the assessment proceedings and not raising this objection before the AO during the assessment proceedings cannot be permitted to raise this contention in the revision proceedings. We are therefore of the considered view that the case of the assessee had been selected under complete scrutiny and not under limited scrutiny. In the assessment order passed u/s 143(3), AO has stated that the assessee firm is notified by the Central Govt. in the special economic zones for construction and development of low cost project of houses and is also entitled for claim of deduction under section 80IB for any 10 consecutive assessment years out of fifteen years beginning from the year in which special economic zone has been notified. This finding of the Assessing officer is clearly out of sync with the factual position and claim made by the assessee company in its return of income. This again shows clear non-application of mind and mechanical acceptance of the claim of deduction. It is a clear case of lack of enquiry on part of the AO in not examining the claim of deduction u/s 80IB of the Act and the order passed by the Assessing officer is clearly erroneous and prejudicial to the interest of the Revenue and where the CIT has directed further examination by the AO and the matter has been set aside to the file of the AO, we see no infirmity in the action of the Pr CIT by invoking her jurisdiction u/s 263 When the matter has not been examined at first place by the AO and there are specific directions given by the Pr. CIT to examine the same after providing reasonable opportunity to the assessee, we do not see any infirmity in the action of the Pr CIT. The assessee would be within its right to raise all its contention on merit before the Assessing Officer and the same are left open and not examined by us. We therefore upheld the order passed by the ld Pr CIT u/s 263 of the Act and the grounds of appeal taken by the assessee are dismissed.

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• 2019 (12) TMI 754
  Addition on the basis of loose paper - resumption u/s 292C - undisclosed income - survey u/s 133A carried out by the Department on the business premises of the assessee - details of share speculation transaction due to favorable share market position - HELD THAT:- As per statement itself 4 no document of assessee kept anywhere outside. No other irregularity found in books. Admittedly, the assessee had never entered into any share transaction in past or even subsequently. It defies any logic why the assessee should have ventured into share transaction, that too, speculative in nature, suddenly and without any reason. It also defies logic, why, if it was so lucrative so as to earn Rs. 1.28 crores in such a short period and absolutely without any effort, the assessee should discontinue such activity after few months. The Survey Party was obviously aware about such lacuna/defects/non - existence of any detail, as not a single question was asked about such vital details/missing links, shortcomings, which any normal investigation officer would have asked. We are of the view that the alleged print out in both the cases i.e. Shreeji Transport Services and Amplas Ploymerts Pvt. Ltd., both are dumb documents and no cognizance of the same can be taken for making addition. Both the authorities below have erred in making addition. Hence, addition in the case of Shreeji Transport Services Pvt. Ltd. and addition is deleted. - Appeals of assessee are allowed.

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• 2019 (12) TMI 753
  Addition u/s 69 - addition based on a single loose sheet found from third party - HELD THAT:- In the case under consideration, the document in the form of receipt dated 2/5/2012 for Rs. 10 lakhs was seized from a third party and the party from whom the receipt has been seized, categorically stated, vide letter dated 12/2/2016, that the receipt dated 2/5/2016 was cancelled, as no payment has been made by the assessee. No corroborative evidence has been brought on record by the Department to indicate that the assessee had made cash payment of Rs. 10 lakhs for booking of the flat. Merely relying on the receipt, which was seized from a third party, and despite the unrebutted fact that the said receipt had been cancelled by the Company, as affirmed by the Director, in his letter dated 12/2/2016, it cannot be concluded that the assessee had made payment of Rs. 10 lakhs for booking of the flat. Therefore, the addition so made by the AO and confirmed by the CIT(A), purely on guesswork and conjectures and surmises, cannot be sustained. We reverse the order under appeal and delete the addition of Rs. 10 lakhs made u/s 69. - Appeal of the assessee is allowed.

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• 2019 (12) TMI 752
  Computation of the capital gain on sale of residential properties - denial of benefit of indexation for the purpose of computing capital gain - AO rejected the claim of the assessee, as assessee did not furnish it through a return of income but by way of a letter - HELD THAT:- According to us it was not a fresh claim of the assessee but merely correction of a computation of capital gain. This issue is squarely covered in favour of the assessee by the decision of the honourable Delhi High Court in Principal Commissioner of Income tax v. Oracle (OFSS) BPO Services Ltd [ 2019 (1) TMI 1087 - DELHI HIGH COURT] . Where assessee had filed a revised computation of income requesting allowance of certain amounts as deduction from capital gain, since it was not a case where any new claim for deduction was made and there was merely recomputation of claim already made by assessee, such revised computation was to be accepted in the assessment proceedings. We reverse the finding of the learned CIT A and learned assessing officer holding that the learned AO should have considered recomputation of the claim of the assessee of capital gain. Whether the indexation of the property shall be allowed to the assessee from the date of allotment of property or from the date on which the possession was given to the assessee/the date of registration? - Date on which the assessee paid the booking money for allotment of the house, he held the property from that date, he might have acquired/ purchased the property on later date. The basic reason for granting indexation of the cost of acquisition, which is linked with the cost inflation index, is to tax only the real income of the assessee and not the capital gain being appreciation of the property including inflation in the price (increase in the cost of living). Therefore, as the intention is to tax only the appreciation in the property excluding the appreciation in the price of the property due to inflation, the assessee must be granted the indexation of the cost in the financial year in which it has incurred/paid, irrespective of the fact that house property is subsequently registered in the name of the assessee or the possession is granted to the assessee of that property later on. In view of this, we are of the view that assessee must be granted indexed cost of acquisition of the sum paid in financial year 2005 2006 by applying the cost inflation index applicable to financial year 2005 2006 of 497 instead of cost inflation index of 551 applicable for financial year 2007 2008 (the year in which the possession of the property was given) to the assessee. Sale of shares allotted to the assessee under employee stock option plan[ ESOP] and taking the sale value above fair market value as income from other source u/s 56 (2) (vii) - Correct head of Income - there is no transfer of any controlling interest - assessee has sold the shares and has not received any other property - chargeable to tax under the head capital gain or as a business income - benefit of section 54F denied - HELD THAT:- Issue squarely covered by the circular number 6/2016 of the CBDT and letter dated 2/05/2016 the above transaction of the sale of the shares and consequent gain arising therefrom should be chargeable to tax under the head capital gains only. Accordingly we direct the learned AO to tax gain arising on the sale of about shares under the head capital gain only. Thus as we have already held that the profits on sale of shares would be chargeable to tax under the head capital gain, the ground number 3 of the appeal of the assessee is allowed and ground number 1 and 2 of the appeal of AO are dismissed. Grant of benefit under section 54F - As we have already held that the gains arising on the sale of the shares would be chargeable to tax under the head of capital gain, we direct learned assessing officer to grant deduction u/s 54F

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• 2019 (12) TMI 751
  Initiation of re-assessment proceedings - HELD THAT:- More recently, the Hon ble Supreme Court in Pr. CIT Vs. Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] has dealt with a similar situation in which notice was issued in the name of an amalgamating company. It was held that after amalgamation, the amalgamating company ceased to exist and thus the notice issued was rendered void ab-initio. Their Lordships further held that participation in the proceedings by the assessee cannot operate as estoppel against law. It is manifest that the facts and circumstances of the instant case are mutatis mutandis similar to those as considered by the Hon ble Supreme Court and the Hon ble Bombay High court in the aforenoted cases. Respectfully following precedent, it is held that the initiation of re-assessment proceedings and the proceedings following thereafter in the name of the deceased are void ab-initio. The assessment order is set-aside. Tribunal on the legal issue against the initiation of re-assessment proceedings, there is no need to dispose off the grounds on merits.

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• 2019 (12) TMI 750
  Disallowance of expenditure incurred on feasibility study - HELD THAT:- Jurisdictional precedents in assessee s own case and in view of the fact that no appeal was preferred by the Revenue for AYs 1986-87 to 2004-05 on the similar issue of incurrence of expenditure for feasibility study for project consultancy, we hold that the assessee is entitled for deduction as Revenue expenditure. Disallowance of expenses on account of education cess - HELD THAT:- M/S ITC LIMITED VERSUS ACIT AND DCIT, CIRCLE-8, KOLKATA VERSUS M/S ITC LIMITED [ 2018 (11) TMI 1611 - ITAT KOLKATA] we direct the learned AO to grant deduction on account of education cess. Disallowance u/s 14A - HELD THAT:- We direct the AO to disallow only to 1% of total exempt income under section 14A Disallowance of commission paid to selling agents for effecting sale to Government parties - HELD THAT:- In the instant case, we find that the learned CIT(A) had categorically observed that the commission agents had indeed rendered liaison services to the assessee in connection with effecting sales to various Government authorities. It is also not in dispute that these commission agents had acted on behalf of the assessee to liaison with the Government parties and they are appointed as agents only by the assessee and not by the Government parties. Hence, the Government parties in response to notice under section 133(6) of the Act had replied, wherever applicable, that they had dealt with the assessee directly and not through the agent. We also find that the majority of the commission agents had indeed furnished the confirmations duly specifying the requisite details before the learned AO which are already on record but we find that there is no factual finding recorded by the lower authorities with regard to veracity of the said confirmations. Hence, as vehemently argued by the learned DR, we deem it appropriate to remand this issue to the file of the AO for de novo adjudication in accordance with law. Claim of depreciation on Gopalpur project assets - HELD THAT:- DR submitted that this issue is not covered by the orders passed by this Tribunal for earlier years as the same is incurred for ISP project at Bareili. We find that the basic facts pertaining to this issue are not available for our records from the orders of the lower authorities. At the same time, if this is consequential issue arising from AY 1997-98 onwards in the form of grant of depreciation, the same should not be denied to the assessee. Hence, we deem it fit appropriate, to admit the additional ground raised by the assessee and remand the entire additional ground to the file of the AO for de novo adjudication in accordance with law. All the arguments of both the parties with regard to the said issue are left upon and no opinion is rendered herein on the same. Accordingly, the additional ground No. 6 raised by assessee is allowed for statistical purposes.

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• 2019 (12) TMI 749
  Disallowance of reimbursement to two employees - absence of details and nature of expenditure incurred - Non-production of details of evidences - HELD THAT:- CIT(A) has sustained the disallowance mainly on the ground of non-production of details of evidences, therefore, to support its ground of appeal, the onus was on to the assessee to produce those relevant documents before the Tribunal. Before us, assessee did not produce any such vouchers of incurring expenses by those employees and claimed as reimbursement. In absence of any documentary evidences of incurring of expenditure by the concerned employees, the issue, whether the amounts are reimbursement to the employees, cannot be examined. Moreover, being the identical amount to all the employees, the payments appear in the nature of allowance rather than reimbursement of actual expenses incurred on behalf of the assessee. No error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the disallowance sustained by the learned CIT(A). The grounds of the appeal of the assessee are accordingly dismissed.

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• 2019 (12) TMI 748
  Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- As relying on MAXOPP INVESTMENT [ 2018 (3) TMI 805 - SUPREME COURT] CIT(A) has rightly sustained the order of the AO in including strategic investments in subsidiaries for computing disallowance u/s 14A r.w. Rule 8D(2)(iii). Therefore, the ground of appeal No. 4(e) is dismissed. Also similar grounds of appeal pleading for excluding investment in group companies stating those being strategic in nature are dismissed. In respect of the other grounds of appeal, we are of the considered view that the ratio laid down in Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that only those investments are to be considered for computing average value of investment which yielded exempt income during the year has relevance in the instant case. Disallowance u/s 14A r.w. Rule 8D cannot exceed the exempt income earned by the assessee during the year under consideration as laid down in HSBC Investment Direct (India) Ltd. [ 2019 (2) TMI 731 - BOMBAY HIGH COURT] , M/s Empire Package Pvt. Ltd. [ 2016 (2) TMI 505 - PUNJAB AND HARYANA HIGH COURT] .

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• 2019 (12) TMI 747
  Addition u/s 14A r.w.r. 8D - suo-moto disallowance made by the assessee - computing the income under normal computation as well as MAT computation under section 115JB - HELD THAT:- As own fund of the assessee exceeds the investment. Therefore in our considered view there cannot be any disallowance of interest expenses. See GUJARAT STATE FERTILIZERS CHEMICALS LTD. [ 2013 (7) TMI 701 - GUJARAT HIGH COURT] We further hold that the disallowances on account of interest expenses in the case on hand cannot be made in view of the fact that the own fund of the assessee exceeds the impugned investments. As already held that there cannot be made any disallowance of any interest as well as administrative expenses in the given facts and circumstances due to the fact that the AO has not pointed out any defect in the disallowances made by the assessee as well as no satisfaction was recorded as mandated under section 14A r.w.r. 8D of Income Tax Rules. Addition in the book profit under section 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:- ad-hoc disallowance will serve 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 subject to the condition that the disallowance shall not exceed the amount of disallowance determined by the authorities below. Disallowance on account of late payment of employees contribution to Provident fund - HELD THAT:- The delay in deposit made to the employees Provident fund and ESIC is not eligible for deduction by virtue of the decision of Hon ble Gujarat High Court in the case of CIT versus GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT]

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• 2019 (12) TMI 746
  Penalty u/s 271 (1)(c) - Surrender of income in the revised return - difference of amount received from share profits and the amount declared in the revised return - HELD THAT:- DR has not pointed out any distinguishing fact in the present case, hence, following the decision of the Tribunal in the case of Gajjan Singh Thind vs ACIT [ 2019 (9) TMI 934 - ITAT CHANDIGARH] for sake of consistency, the penalty levied by the Assessing Officer declared in the revised return is ordered to be deleted, whereas, the penalty @ 100% of the tax amount sought to be evaded in respect of the difference of amount received from share profits and the amount declared in the revised return i.e. on the income of Rs. 40,015/- is hereby confirmed. In the result, the appeal of the assessee is treated as partly allowed.

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• 2019 (12) TMI 745
  Addition u/s 68 - unexplained cash credit - loans received by the assessee were not genuine - HELD THAT:- Order passed by the Ld.CIT(A) is in gross violation of the principles of natural justice being based on material collected at the back of the assessee. The entire case of the CIT(A) for holding the credits ingenuine rests on information derived from the bank statements of the creditors, information derived from internet about the creditors, and on the basis of findings recorded by the ITAT in case of one of the creditors. The bank statements of the creditors admittedly were additional evidences filed by the assessee showing cheque issued for making loans to the assessee. As rightly pointed out by assessee, CIT(A) had not admitted the evidences for adjudication. From the bank statements, we find, the Ld.CIT(A) collected information that there were amounts deposited before the issuance of cheques to the assessee in all cases. Further the Ld.CIT(A) extracted information from the internet that the name of one of the depositor companies had been struck off from the register of companies. She also had information in her possession that the ITAT has held in case of one depositor company that it was engaged in providing accommodation entry only. Reading all the aforesaid information together, the Ld.CIT(A) held that the loans received by the assessee were not genuine. Undeniably, the aforesaid information was not confronted to the assessee. Even the Ld. DR has admitted to the said fact and we have not been able to find anything in the order of the CIT(A) showing that the said information was confronted to the assessee. Clearly, the impugned order has been passed in gross violation of the principles of natural justice, that none should be condemned unheard. Restore the matter back to the CIT(A) for adjudication afresh. The additional evidences filed by the assessee, being imperative to establish the claim of the assessee that the transaction was genuine , are directed to be admitted for adjudication. Appeal filed by the assessee is allowed for statistical purposes. The Ld.CIT(A) is further directed to obtain report from the AO on the evidences as per the provisions of Rule 46A of the Income Tax Rules,1962 and after confronting all material to the assessee, to decide the issue in accordance with law - Appeal filed by the assessee is allowed for statistical purposes.

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• 2019 (12) TMI 744
  Reopening of assessment - AO Jurisdiction to frame the assessment against the assessee - Addition u/s 69C - unexplained purchases calculated on the basis of peak credit - payment received by purchase parties are returned to the applicant in cash after deducting small commission - HELD THAT:- Primary onus was on assessee to produce the suppliers and substantiate the transactions, particularly in view of the fact that notices issued u/s 133(6) remained un-responded to and the revenue was in possession of specific information that the assessee procured bogus purchase bills from these suppliers, who admitted to have entered into bogus transactions without supplying any material. This onus, in our opinion, remained undischarged and the conduct of the assessee would not inspire us to subscribe to the pleadings made by Ld. AR, in this regard. AR has also submitted that Ld. AO had no jurisdiction to frame the assessment. However, the same are mere submissions without there being any material to support the same. Nothing has been demonstrated before us to establish that learned AO had no jurisdiction to frame the assessment against the assessee. Therefore, we do not find any force in the legal arguments raised by Ld. AR before us. We concur with the observations made by first appellate authority in the impugned order, in this regard. The submissions made by Ld. AR and case laws being relied upon, in this regard, would not come to the rescue of the assessee. The assessee was in possession of primary purchase documents. The payment to the suppliers was through banking channels and the assessee had furnished details of corresponding sales made against the impugned purchases. The sales turnover reflected by the assessee was not disturbed by the revenue. At the same time, the assessee failed to rebut the allegations levelled by revenue and could not produce even a single party to confirm the transactions particularly in the backdrop of the fact that these suppliers were major suppliers for the assessee and substantial purchases were sourced by assessee from these suppliers. Notices issued u/s 133(6) remained unresponded to in all the cases. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which lower authorities has rightly done so. Keeping in view the fact that the assessee was a trader and dealing in low-margin item like metal, which bears a lower VAT rate and also in view of the fact that the assessee had already reflected Gross Profit Rate of 1.71%, the estimation on peak basis as made by learned first appellate authority was on the higher side. We estimate the same @2% of alleged bogus purchases. The same would work out to be Rs. 4,93,589/-. The balance additions stand delete. AO is directed to recompute the income in terms of this order. Assessee pleaded that the impugned additions made u/s 69C would not be sustainable under law since the transactions were duly recorded in the books of accounts and the payments were through banking channels. However, as concluded by us in the preceding paras that the material would have been sourced by the assessee from undisclosed sources, the payment against those purchases would also be from undisclosed sources. The transactions reported by the assessee from the tainted supplier and the payment through banking channels could not be held to be more than paper transactions. Therefore, we concur with the conclusion of first appellate authority, in this regard, as made in the impugned order. This plea stands rejected.

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• 2019 (12) TMI 743
  Revision u/s 263 - Administrative CIT had sought to revise this order passed u/s.154 on the ground that the assessee had violated the provisions of Section 79 due to change in shareholding pattern which fact has not been noticed or enquired by the ld. AO while granting benefit of set off of brought forward losses of earlier years - HELD THAT:- It could be safely concluded that assessee had duly brought to the notice of the ld. AO about the scheme of amalgamation, about the scheme being approved by the Hon ble High Court, about the shareholding pattern post amalgamation etc as detailed hereinabove. These facts were duly considered by the AO both in the original assessment proceedings as well as in the proceedings u/s.154 of the Act. Hence, having considered those facts and the ld. AO have taking a view thereon, the logical conclusion that could be drawn is that the AO ad taken one of the possible views on the matter, which cannot be the subject matter of revisionary jurisdiction u/s. 263 of the Act by the ld. CIT. Hence, it could be safely concluded that the order of the ld. AO could not be construed as erroneous. Denial of set off of brought forward losses of earlier years against the income of the assessee for the year under consideration - HELD THAT:- The issue is directly settled in favour of the assessee in the case of CLP Power India (P) Ltd. vs. DCIT [ 2018 (4) TMI 1282 - ITAT AHMEDABAD] as find considerable merits in the plea on behalf of the assessee that section 79 has not application in the absence of change in beneficial voting power. This being so, we see no error in the order of the AO on this score. This apart, once these facts were brought to the notice of Pr.CIT, the Pr.CIT ought to have appreciated the case of the assessee objectively in perspective and could not shrink his sacrosanct obligations and resort to simply set aside a completed assessment on non-existent ground. Thus, the prerequisites of section 263 are not satisfied. CIT had directed the ld. AO to directly disallow the benefit of set off of losses of earlier years against the income of current year on the ground that assessee had not complied with provisions of Section 79 of the Act, ignoring the various arguments made by the assessee before him, which are part of the paper book and the materials available on record. Moreover, we find that the ld CIT should have made proper enquiries on the impugned issue before reaching to such conclusion in the light of materials available on record and decided case laws thereon, which he had failed to do so in the instant case. Once he directs the ld AO to make certain disallowance, the ld AO is bound by that and the assessee would not get any chance to adjudicate the issue on merits. In this factual background, we had to address the issue on merits also and adjudicate the issue hereinabove. We find that the ld. CIT had only tried to substitute his opinion on the facts and circumstances of the case in the opinion of the ld. AO. This is not permissible in the revisionary jurisdiction u/s.263 - Decided in favour of assessee.

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• 2019 (12) TMI 742
  Benami Property - Rights of a bona-fide purchaser as given in the section 27(2) of the PBPT Act, 1988 - burden of proof of proving transaction - Provisional Attachment Order passed u/s 24(4)(a)(i) of the PBPT Act, 1988 - HELD THAT:- Burden of proof is on the I.O. at the initial stage to establish with cogent evidence that the purchase by the Appellant of the subject property is not bona-fide. Respondent in its rejoinder dated 27.12.2018 at has itself admitted that it was in the possession of the information and documents that the subject property had been sold/transferred to the Appellant by M/s Veena Industries Ltd. Even after coming into possession of such documents the Respondent had chosen not to give any opportunity to the Appellant to explain its case in the proceedings before the Respondent. Appellant had moved an application for intervention and as such the Adjudicating Authority has powers u/s 26(6) to add name of the party whose presence before the Adjudicating Authority may be necessary to enable it to adjudicate upon and settle all questions involved in the reference. Adjudicating Authority did not exercise it powers and did not implead the Appellant as a party to the proceedings even after application was made before it by the Appellant, and the Respondent had also admitted in its rejoinder to the impleadment application that there is no legal impediment in arraying the Appellant as a party to the proceedings before the Adjudicating Authority. Appellant is an incorporated entity which has a separate and distinct legal identity to that of M/s Veena Industries Limited. Appellant had acquired the rights and interest in the subject property in its own name after payment of adequate consideration from its own funds, stamp duty and all the applicable fees, taxes and duties. At the time of execution of the Agreement to Sale on 18.03.2013, there was no common director in the two entities i.e. M/s. Veena Industries Ltd. and Kavita Infrastructure Pvt. Ltd. Thus, the allegation made by the respondent of common management/shareholding factually has no substance. The impugned order is set-aside by allowing the appeal.

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• 2019 (12) TMI 741
  Disallowance of expenses on brand reminders and expenses incurred on purchase of medical books and journals provided to HealthCare Professionals ( HCPs ) - violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) - allowable expenditure under Section 37(1) in view of the IMC Regulations and CBDT Circular No. 05/2012 - HELD THAT:- In the present case, the Medical Practitioners are not under any binding obligation after receiving the brand reminder from the assessee company bearing logo of the assessee. This fact clearly reveals that the distribution of articles by the assessee is unconditional and does not go against the public policy. Mere distribution of the articles and other items having logo of the company without casting any burden upon the person receiving the items is merely an advertisement expenditure incurred by the company to promote the brand of the assessee. AO has mentioned that free items might influence the decision of the Doctors. In this regard, we find that the articles are of nominal value and are not capable of influencing the decision of such highly skilled Medical Practitioners. There is no burden upon them. So this argument of the Assessing Officer has no substance. The expenditure incurred by the assessee is thus akin to advertisement and sales promotion expenditure incurred in any other businesses and cannot be disallowed for the reasons assigned by the Assessing Officer. AO misses the point that the advertisement expenditure, by its very nature, is not spent for a crystallized quid pro quo or against any services rendered to the payer. Once it is found that the expenditure is in the nature of advertisement expenditure, the question raised by the Assessing Officer loses significance. Un-reconciled amounts as per Individual Transaction Statement ( ITS ) - whether the un-reconciled amount of ITS / AIR can be added to the total income of the assessee when the assessee denies having carried out any such transaction ? - HELD THAT:- We find that the details in the ITS statement are uploaded by the third party and assessee does not exercise any control on the same. There is no authenticity of such details nor are such details verified by any independent authorities as to its correctness and truthfulness. In the present case, the assessee denied to have carried out the un-reconciled transactions of ITS. To prove its bona fide, the assessee also addressed letters to the concerned parties to get the details of the transactions which the other parties claim to have carried out by them with the assessee. However, none of the parties, except Bank of India, replied to the letters addressed by the assessee; the bank accepted the fact that there was human error and the PAN of the assessee was wrongly linked to other customer data and the transaction was not pertaining to the assessee. Factual position clearly raises the doubt on the authenticity and correctness of the data reported in the ITS. The Assessing Officer has also not brought on record any concrete evidence to establish that the contents of the ITS were correct. In this scenario, we do not find any reason why the contents of the ITS report should be relied upon to the hilt. We, accordingly, set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition on account of un-reconciled amount. Accordingly, this Ground of appeal is allowed.

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• Customs

• 2019 (12) TMI 740
  Misconduct of Inspector / officer of customs - Misdeclaration of goods - evasion of customs duty - contravention of Rule 3 of the Central Civil Services (Conduct) Rules, 1964 - long delay in conducting enquiry - HELD THAT:- The Court notes that under Rule 14(3) (4) of the CCS (CCA) Rules, it was incumbent, where the Government proposes to hold an inquiry, to draw the substance of imputations which would contain a list of documents by which and a list of witnesses by whom, the Articles of Charge are proposed to be sustained. Although, as pointed out by learned counsel for the Petitioners, in disciplinary inquiry proceedings the rules of the CPC and the Evidence Act may not strictly apply, it is basic that the mere production of a document is not sufficient even in a disciplinary inquiry. There has to be some witness to prove such a document. Without a witness to prove the documents, the Enquiry Officer cannot take it on record as a genuine document - In the present case in the absence of any list of witnesses, there was no means by which the documents could have been proved by the Department in the inquiry proceedings. Delay in conducting enquiry - HELD THAT:- It is fairly well-settled that an inordinate unexplained delay itself causes prejudice to an accused employee - In each of the present cases there was no valid explanation for the inordinate delay in initiating the preliminary enquiry. Petition dismissed.

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• 2019 (12) TMI 739
  Miantainability of appeal - monetary limit involved in the appeal - Refund of additional duty of Customs - time limitation of one year - vires of notification issued under the provisions of Section 25 of the Customs Act,1962 - applicability of of one year specified in para 2(c) of the Notification No.102/2007 dated 14.09.2007 as amended by Notification No.93/2008-Cus dated 01.08.2008 - application of time limit prescribed in taxation. HELD THAT:- In view of instructions dated 30.12.2016 issued by Govt. of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs the monetary limit for filing of appeals before this Court has been fixed at Rs. 20 lacs and as such the instant appeal is not maintainable, the amount involved being Rs. 4,00,442/-. Appeal dismissed as not maintainable.

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• 2019 (12) TMI 738
  Valuation of imported goods - import of old and obsolete Aircraft - rejection of transaction/declared value - redetermination of value on the basis of contemporaneous import made at Nhava Sheva Port - Confiscation - redemption fine - penalty - HELD THAT:- The appellant has imported these two aircrafts after obtaining permission from the Department of Civil Aviation and after getting a license from DGFT. The Department has re-determined the value only on the basis of alleged contemporaneous import through Nhava Sheva where the value was determined at Rs. 87,35,238/-. Further, at the time of making the statement, the Chairman of the Institute produced original invoice No.1709 dated 11.10.2008 from M/s J S Aviation showing total value of the goods at USD 201025 equivalent to Rs. 98,90,438/-. Further, the Adjudicating Authority has admitted that there is a difference in the year of manufacture of the aircraft imported in Nhava Sheva compares to the aircraft imported by the appellant. There are no reason for the Revenue to reject this transaction value - further, these aircrafts imported by the appellant is a junk and unworthy but useful for school of AME studies and there is not enough avionic equipments as per the report of the Chartered Engineer placed on record. The re-determined value of Rs. 1,60,14,576/- is not the correct valuation whereas the Customs duty should be assessed as per the invoice value of USD 201025 equivalent to Rs. 98,90,438/- - the impugned order set aside - case remanded back to the Customs Authorities to re-assess the value on the basis of original invoices placed on record - redemption fine and penalty upheld. Appeal allowed by way of remand.

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• 2019 (12) TMI 737
  Classification of imported goods - dairy machinery including the packing machine - whether classified under CTH 84342000 or under CTH 84223000? - HELD THAT:- It is rather an unusual situation where the same bill of entry was assessed by the Revenue under 8422 3000 against the assessee s classification under 8434 2000 and the matter has been adjudicated and the appeal was decided by the first appellate authority and further appeal was pending before this Bench. Meanwhile, another arm of the Department i.e. DRI came to a different conclusion that the machinery is classifiable under 8419 and accordingly issued a show cause notice challenging the classification while the appeal is pending before this Tribunal - The second show cause notice was also decided by the Commissioner who has also recorded that the earlier assessment of the bill of entry as well as the order of the Commissioner (Appeals) and that the matter is pending before this Bench on the same issue against the same bill of entry. Thereafter, he proceeded to decide the show cause notice issued by DRI against the same bill of entry and the same machinery proposing a third classification. The findings of the Commissioner is also agreed upon that the machinery in question is an integrated plant and is to be classified as Dairy Product in view of the Section Notes 3, 4 and 5 for the Section XVI of Custom Tariff. Appeal dismissed - decided against Revenue.

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• 2019 (12) TMI 736
  Confiscation - imposition of redemption fine as well as penalty - Valuation of imported goods - Multi Functional Digital copiers (MFD) - enhancement of value - whether the consignment MFD copiers imported prior to 05.06.2012 when the restriction was imposed upon them are liable to confiscation under section 111(d) for violation of Foreign Trade Policy? - HELD THAT:- Prior to this date, restrictions were imposed only on photocopiers and not on Multi Functional Digital Copiers explicitly. This issue is no longer res-integra and the three Member Bench in the case of COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS ASIAN COPIERS [ 2015 (2) TMI 1221 - CESTAT NEW DELHI] has, by a majority decision, decided that import of Multi Functional Digital Copiers prior to 05.06.2012 was not restricted. While deciding this matter, they have also considered the judgment of the Tribunal Chennai in the case of M/S UNITECH ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2012 (8) TMI 215 - CESTAT, CHENNAI] , relied upon by the Ld. DR - Respectfully following the ratio of this decision, it is held that the import of the impugned goods is not restricted and their confiscation under section 111(d) is not sustainable and needs to be set aside. A plain reading of the Order-in-Original shows that confiscation was held under section 111(d) of the Customs Act, 1962 which pertains to import in violation of the restrictions and prohibitions and not under section 111(m) which deals with confiscation for under valuation, etc. - thus, the confiscation under section 111(d) of the Customs Act 1962 needs to be set aside - Consequently, the redemption fine imposed under section 125 on the appellant also needs to be set aside - The penalty imposed under section 112(a) of the Customs Act, 1962 is consequent to the goods being held liable for confiscation under section 111. As the goods are not liable for confiscation under section 111(d), the penalty imposed under section 112(a) also needs to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 735
  Benefit of exemption - re-import of goods - Customs duty goods which are reimported within three years of their export for repair or reconditioning - benefit of N/N. 52/2003-Cus, dated 31.03.2003 - 100% EOU - the goods in the present case were reimported for the purpose of repacking - whether the activity of repacking of pharmaceuticals can be called as repair or reconditioning? HELD THAT:- Reconditioning also is more or less synonymous with the word repair - Pharmaceutical products are covered at Sl.No. 31 of the Third Schedule to the Central Excise Tariff Act. Since the product in question is a pharmaceutical product, we also looked into the chapter notes to Chapter 30 of Central Excise Tariff under which these products fall. Chapter Note 6 clarifies that while dealing the pharmaceutical products, re-labelling or re-labelling of the containers intended for consumers or repacking sought from bulk packs to retail boxes or for adopting of any other treatment to render the product marketable to the consumer, shall amount to manufacture . Section 2(f) of the Central Excise Act, 1944 as well as Chapter Note 6 to Chapter 30 of Central Excise Tariff make it abundantly clear that repacking of pharmaceuticals amounts to manufacture. Any activity which gets squarely covered under the definition of manufacture cannot be called as repair or reconditioning of the products. Sl. No. 14 of Annexure-I to the impugned notification exempts the products/goods imported within 3 years from the date of exportation only under the condition that the goods are reimported either for repair or for reconditioning. Hence when the goods are reimported for an activity which amounts to manufacture, such re-importation will not fall under the impugned notification. Therefore, the exemption benefit of the notification cannot be extended to the appellant. The appellant also relied on CBEC s circular No. 127/95, dated 14.12.1995 - there is nothing as such in this circular which extends the benefit of the exemption notification No. 52/2003 for re-importation of goods when those are re-imported within 3 years of exportation for an activity which amounts to manufacture. The appellant is not entitled to the benefit of exemption notification No.52/2003-Cus. Dated 31.03.2003 - Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2019 (12) TMI 733
  E-Voting/voting of members by means of postal ballot - Inclusion of Rule 22 of Companies (Management and Administration), Rules, 2014 for providing Postal Ballot facility in pursuant to Section 230(6) of the Companies, Act, 2013 - Enlargement of Dates for providing E-voting facility as per the Postal ballot Rules to 30 (thirty) days - Extending dispatch of Notice by way of physical means to physically held shares in addition to dispatch of notice electronically. HELD THAT:- The prayer made by the Transferor Company is allowed. The Transferor Company is permitted to conduct the voting of the Shareholders through Postal Ballot as per Rule 22 of the Companies (Management and Administration) Rules, 2014. The date for providing E-voting facility as per the Postal Ballot Rules is enlarged upto the period of 30 (thirty) days, as prayed for. The Transferor Company is also permitted to effect the service of notice to the Shareholders either by way of physical or/and by electronic means. Application disposed off.

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• Securities / SEBI

• 2019 (12) TMI 732
  Recovery proceedings continued against the legal representative of the deceased - HELD THAT:- Proceedings would continue against the legal representative of the defaulter if the defaulter dies after the certificate was drawn up by the tax recovery officer. At the outset, Rule 85 is not applicable as we have already held that Section 28A is not applicable. In any case, in the instant case, recovery certificate was drawn on June 15, 2016 much after the death of the appellant s husband who died on November 5, 2015. The recovery certificate and the attachment proceedings was done against a dead person which was without jurisdiction. Once the person dies, recovery proceedings cannot continue and can only continue against the legal representatives if the Statute provides specifically. SEBI Act and its Regulations does not contain any provision to continue recovery proceedings against the legal representative of the deceased. So long as there is no separate machinery to proceed against the legal representative, the cause of action comes to an end and recovery proceedings could no longer continue. In the light of the aforesaid, the impugned recovery certificate for recovery of Rs. 12 lacs cannot be sustained and is quashed. The appeal is allowed

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• Insolvency & Bankruptcy

• 2019 (12) TMI 783
  Admissibility of petition - initiation of CIRP - Territorial Jurisdiction - Jurisdiction of Tribunal to entertain the application - case of applicant is also that Corporate Debtor was not served with any notice - Section 7 of I B Code - HELD THAT:- Since the Corporate Debtor had been issued various notices and was admittedly served by e-mail and had even written to the representative of the Financial Creditor about the receipt of the email, it could have appeared before this Tribunal and demanded a copy of the application and annexures thereon from the Financial Creditor or from the Tribunal - But, no such attempt was even made by the Corporate Debtor which clearly reflects that the Corporate Debtor had been watching the proceedings till the date of admission of the petition and immediately thereafter filed the present application on 27th February, 2019 challenging the order of admission on the ground of territorial jurisdiction. Service of notice - HELD THAT:- It is worthwhile to mention that when the application was filed by the Financial Creditor, this Tribunal had the necessary territorial jurisdiction to hear and entertain the present application and the Financial Creditor as well as the registry of this Tribunal had repeatedly tried to send notices by various modes to serve the Corporate Debtor and the notices were sent by registered speed post and by e-mail and could be deemed to have been served, even when the proof of actual delivery is not there. Notice was however admittedly received by email by the Corporate Debtor - in the present case the issue relates to the territorial jurisdiction even though this Tribunal had the territorial jurisdiction on the date of filing of the application as well as the jurisdiction to entertain the subject matter i.e. application under Section 7 of the Code. There are no substance in the application and the arguments advanced by Ld. Sr.Counsel for the applicant - application dismissed.

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• Service Tax

• 2019 (12) TMI 731
  Territorial jurisdiction - taxable territory - it has been submitted that undersea cables were laid upto 12 nautical miles of the territory of India and were hence connected with the land mass in India - first proviso to Rule 3 (ii) of the Taxation of Services (Provided from outside India and received in India) Rules, 2006 - HELD THAT:- Issue notice on the Special Leave Petition as well as on the application for condonation of delay.

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• 2019 (12) TMI 730
  Permission for withdrawal of appeal - Rent-a-cab service - transportation services - transportation of papers/answer sheets, examiners agreement terms indicating vehicle itself not given for operation under ownership and management of client - HELD THAT:- The Civil Appeal stands dismissed as withdrawn.

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• 2019 (12) TMI 729
  Permission for withdrawal of petition - appeal was dismissed on the ground of delay as well as non deposit of 7.5% of the demand - HELD THAT:- The present writ petition is hereby dismissed as withdrawn with liberty to seek the revival in case liability is not discharged under the Amnesty Scheme.

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• 2019 (12) TMI 728
  Maintainability of petition - alternative remedy of appeal - Jurisdiction to entertain petition - levy of service tax on license fees charged by the Bihar State Government for the license issued - business in liquor - HELD THAT:- We are prima facie of the considered view that it is not a case of inherent lack of jurisdiction, warranting interference by this Court by way of writ petition, in the present petition under Article 226 of the Constitution of India. As such, in view of availabiliy equally efficacious alternative remedy, more so, in a case where disputed questions of fact are involved, the present petition is disposed of by reserving right to the petitioner to seek such remedies by way of appeal before the Tribunal in accordance with law.

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• 2019 (12) TMI 727
  Permission for withdrawal of appeal - VCES Application - appellant providing Business Auxillary Services like purchase and sale of SIM Cards, bucks and recharge coupon - HELD THAT:- Appeal dismissed as withdrawn with liberty, as prayed for.

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• 2019 (12) TMI 726
  Levy of interest and penalty - appellants have voluntarily made the payment of tax before issuance of SCN and requested for waiver of show-cause notice - Board clarification F.No. 137/46/2015 ST dated 18/08/2015 - imposition of penalty - HELD THAT:- The payment of 15% penalty was voluntary and based on this voluntary payment, show-cause notice was waived and there was no protest raised by the appellant while making the payment. Further, as per the Board clarification dated 18/08/2015, payment of penalty without issuance of show-cause notice was in accordance with law. Further, the claimant had filed a declaration while seeking waiver of show-cause notice that the amount paid will not be sought as refund. Appeal dismissed - decided against appellant.

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• 2019 (12) TMI 725
  Business auxiliary services - appellant is a practicing chartered accountant and also providing services, namely, field investigation, collection of payments, recovery of loans etc. to various banks and financial institutions - appellant has paid service tax along with interest before issuance of the show cause notice - Penalty - scope of SCN - HELD THAT:- Admittedly in the show cause notice, it has been alleged that after 01.05.2006 the merit classification of the services rendered by the appellant do qualify under Business Support Service, therefore, for the period prior to 01.05.2006, demand of service tax cannot be raised against the appellant under the category of Business Auxiliary Service, therefore, the said demand is set aside. After 01.05.06 it is alleged in the show cause notice that the merit classification of the services in question is under the category of Business Support Service, whereas, the adjudicating authority held that said service do qualify under the Business Auxiliary Services which means the adjudicating authority has gone beyond the scope of the show cause notice, therefore, the adjudication order deserves no merits, hence the same is set aside. Penalty - HELD THAT:- The appellant has collected the service tax from their clients and during the impugned period the appellant has collected certain amount as service tax from the service in question from their clients and the same is required to be deposited by the appellant under Section 73(D) of the Finance Act, 1994 - the applicant is directed to deposit whole of the amount collected as service tax from their clients along with interest within 30 days of the receipt of this order - Penalty cannot be imposed. Appeal disposed off.

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• 2019 (12) TMI 724
  Classification of services - warehousing services to be used by the Food Corporation of India through M/s PUNGRAIN - agreement for providing of warehouse and other ancillary services such as security, insurance provision of main power, weigh bridge operation, etc. - whether classified under storage and warehousing services or under renting of immovable property services for agriculture use both prior to 01.07.2012? - exempt services or not? HELD THAT:- The perusal of the agreement and the monthly bill raised by the appellant leaves no doubt that the service provided by the appellant is not merely of renting of godown to M/s PUNGRAIN but it is along with the preservation, maintenance and security services, which subsequently are being used by Food Corporation of India (FCI) for storage of the food grains. This aspect regarding the storage of the food grains is also not disputed by the Department - It is the contention of the Department that the appellant has not directly provided the warehouse storage services, but it is through M/s PUNGRAIN to F.C.I. This issue has come up for decision before this Tribunal in the case of PUNJAB STATE WAREHOUSING CORPORATION VERSUS CCE, CHANDIGARH [ 2018 (2) TMI 154 - CESTAT CHANDIGARH] wherein it has been held that such services would be more appropriately covered under the category of storage and warehousing services in terms of Section 65(105)(zza) of the Act. Thus, the service provided by the appellant is covered under the category of storage and warehousing services and renting of immoveable property services in terms of Section 65(105)(zzzz) of the Act as defined in the impugned order. Demand pertaining to the period after 01.07.2012 - declared services or not - HELD THAT:- The impugned order has considered the services under the category of declared service under Section 66E of the Act, wherein at the Sl. No. (a) renting of immoveable property has been treated to be deemed service under the negative list. However, on perusal of the provisions, it is found that the services being rendered by the appellant would be more appropriately covered under the category of the services which are under the negative list vide entry no. 66D(v) - the impugned order is incorrect in holding the services rendered by the appellant in the category of declared service. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 723
  Refund of unutilized CENVAT Credit - time limitation - refund claim was filed on 07.06.2017 for the quarter 01.04.2016 to 30.06.2016 wherein the last payment was received on 02.06.2016 - refund rejected on the ground of time bar - Section 11BB of CEA - HELD THAT:- It is an admitted position that one refund claim is required to be filed for each quarter. Admittedly, in a case, where one refund claim is required to file in each quarter, therefore, the period of limitation is to counted one year from the last date of the said quarter is the date for filing the refund claim in terms of Section 11B of the Central Excise Act, 1944. As, there is an ambiguity in the notification that what should be the relevant date. In the notification on the one hand, it has been stated that one refund claim is to be filed quarterly and on the other hand, it is saying that within one year from the date of receiving of the foreign convertible exchange, when a Notification is having ambiguity that the benefit of doubt goes in favour of the assessee. Admittedly, it is an admitted position that there is an ambiguity in the notification, therefore, benefit of doubt goes in favour of the appellant and the same views was taken in the various pronouncements of the Tribunal as in the cases of M/S. GRAN OVERSEAS LTD. VERSUS C.C.E. DELHI [ 2017 (1) TMI 234 - CESTAT NEW DELHI] and POONA BRUSH COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE - III [ 2018 (2) TMI 530 - CESTAT, MUMBAI] . The refund claims filed by the appellants are within one year from the last date of the quarter in each - refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 722
  Benefit of exemption notification No. 34/2004-ST dt.03.12.2004 - GTA services - Exemption based on gross amount charged on consignment transported in goods carriage - HELD THAT:- This exemption is available only in cases where the gross amount charged for consignments transported in goods carriage does not exceed Rs. 1,500/- or gross amount on individual consignment transported in goods carriage does not exceed Rs. 750/- - in the present case, the appellant has not put forth any evidence to show that transportation charges have fallen below the threshold limits which would have entitled them to the benefit of exemption notification - benefit of notification cannot be extended. Benefit of N/N. 41/2007-ST dt.06.10.2007 - services used for export of goods from the whole of service tax leviable thereon - HELD THAT:- The words used are NOT used in relation to export of goods . In this case, GTA services were availed for transporting goods from their Kodur unit to Chennai. Thereafter, the Chennai unit in turn exported the goods. While this transportation may be in relation to export of goods, there is no sufficient evidence to show that this transportation is actually for export of goods - Secondly, the exemption notification does not provide the exemption straightaway but is subject to certain conditions and available by way of refund of service tax paid on the specified services used for export of goods. Also, this exemption is available by way of refund and not at the source. This does not automatically allow the appellant to NOT pay service tax which they were liable to pay - benefit of notification cannot be extended. Extended period of limitation - HELD THAT:- The appellant was fully aware of their liability to pay service tax on GTA services and had indeed obtained registration for the same services received in their Chennai unit but had not done so, in respect of the Kodur unit. Therefore, the appellant cannot plead ignorance about their liability to pay service tax and take registration and follow the appropriate procedures - the extended period of limitation has been correctly invoked. Appeal dismissed - decided against appellant.

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• 2019 (12) TMI 721
  CENVAT Credit - input service - health and life insurance policies for employees - period 2009-10 and 2010-11 - whether the said input services are excluded from the scope of input services during the relevant period? - HELD THAT:- Prior to 01.04.2011, there was no specific exclusion of any service from the definition of input service . It is a settled legal position that during that period any service which was used in the course of business qualified as input service for that business - impugned order deserves to be set aside. Even otherwise, the learned counsel has also demonstrated that they are also covered by the Employees State Insurance Act and therefore the Commissioner (Appeals) has erred in holding that they are not so covered by ESI Rules. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 720
  Refund of CENVAT credit - input services - Parking Charges - Work Contract Services - Rule 5 of CCR - HELD THAT:- It can be seen from the records that the appellants have availed the said services in order to use the premises of another person for parking of vehicles. The said services having been used for providing output services both credit as well as refund is eligible - credit allowed. Works Contract Services - rejection of credit availed on the said services alleging that these are availed for setting up of the office of the appellant - HELD THAT:- On a perusal of the invoices as well as annexure to the agreement, it is seen that there are certain supply of goods which do not go into the Works Contract Services. The appellant has to furnish details of the amount relating to supply of such items. Therefore, this issue matter requires to be remanded to the original authority for verification as to eligibility of credit on Works Contract Services after giving an opportunity to the appellant to furnish details with regard to the supply of goods in the nature of carpets, modular furniture and chairs. The amount relating to carpets, modular furniture and chairs will not be eligible for credit - issue with regard to the Works Contract Services is remanded to the adjudicating authority to consider the same. Appeal allowed in part and part matter on remand.

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• Central Excise

• 2019 (12) TMI 719
  Application to Settlement Commission - recovery of short paid duty - Clandestine removal - HELD THAT:- There are nothing to entertain the Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed.

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• 2019 (12) TMI 718
  Permission to withdraw of appeal - CENVAT Credit - duty paying invoices - supplementary invoices - Rule 9 of the Cenvat Credit Rule, 2004 - HELD THAT:- At the time of hearing, the learned counsel for the appellant placed on record affidavit dated 30.11.2019 of one Sh.Chand Singh, Authorised Signatory on behalf of the appellant-private company filed in Court today, whereby it is revealed that the appellant has availed the benefits under the Amnesty Scheme, 2019 and upon acceptance of his application, the appellant wishes to withdraw the present appeal. Appeal dismissed as withdrawn.

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• 2019 (12) TMI 717
  Permission for withdrawal of appeal - scope of manufacturer - offending portion of the notification dated 8.4.2011 - HELD THAT:- The applicant-petitioner has moved this application seeking an unconditional withdrawal of the writ petition in view of the petitioner having availed the benefit of Amenity Scheme floated by the Government of India effective w.e.f. 1.9.2019. SLP dismissed.

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• 2019 (12) TMI 716
  Recovery of duty alongwith interest and penalty - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - HELD THAT:- Perusing the petition and without expressing any opinion on the merits of the controversy, the present petition is disposed of at this stage by permitting the petitioner to raise all objections as has been sought to be raised in the writ petition by submitting reply to the show-cause notice (Annexure P/1) within one month.

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• 2019 (12) TMI 715
  Interest on delayed refund - relevant date for calculation of interest - appellant is seeking interest from the date of deposit of duty whereas the Revenue is of the view that the appellant is entitled to interest after the expiry of three months from the date of application i.e. from 24.05.2018 when the appellant moved application for refund after the decision of the Tribunal - Section 11BB of CEA - Board Circular No. 670/61/2002-CX dated 01.10.2002 - HELD THAT:- In view of the law laid down by the Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ] which have been subsequently followed by various Benches of the Tribunal and the High Court, it can be held that the appellants are entitled to interest under Section 11BB of the Act commencing from the date of expiry of three months from the date of filing the refund application, which in the present case is 25.07.2006 which is admitted in the SCN itself. The appellant is entitled to interest after expiry of three months from 25.07.2006 till 21.12.2018 when the refund was sanctioned - Appeal disposed off.

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• 2019 (12) TMI 714
  Area based exemption - Classification of goods - resins - resins are captively consumed by the appellants namely Phenol Formaldehyde (PF), Urea Formaldehyde (UF), Melamine Formaldehyde (MF) used to manufacture plain and pre-laminated particle boards or laminates - whether classifiable under Tariff Heading 3909 or 3506 of the Central Excise Tariff Act or not? - benefit of N/N. 50/2003- CE dt. 10.06.2003. HELD THAT:- As it has been clarified by Ministry of Chemicals Fertilizers, the said resins do qualify under Tariff Heading 3506 of the Central Excise Tariff Act; therefore, the resins in question, which are captively manufactured by the appellants having merit classification under Tariff Heading 3506 - The items classified under Tariff Heading 3506 are entitled for benefit of exemption Notification No. 50/2003-CE dt. 10.06.2003; therefore, the appellants are entitled to exemption under Notification No. 50/2003- CE dt. 10.06.2003 for the items in question which have been captively consumed by the appellants to manufacture laminates, plywood, boards etc. Therefore, no duty is payable by the appellants. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 713
  Clandestine removal - shortage of finished goods as well as raw material - Can duty be demanded on the raw material found short during the course of investigation or not? - HELD THAT:- Admittedly duty has been demanded from the appellant on shortage of raw material, the said raw material is not manufactured by the appellant and in terms of Section 3 of Central Excise Act, 1944, duty is payable on the goods manufactured by the assessee. Admittedly these goods have not been manufactured by the appellant, therefore, no duty can be demanded from the appellant on shortage of raw material. At the most, the Cenvat credit can be asked to reverse which is not the case of Revenue. The said mistake done by the Revenue cannot be rectified at this stage - the demand of duty in shortage of raw material is set aside. Merely shortage recorded during the course of investigation finished goods, can duty be demanded without further investigation or not? - HELD THAT:- As the value adopted for the clandestine removal of finished goods no explanation has been given by the Revenue as how they have calculated the price of the finished goods @ Rs. 50,000 /MT for hex nut and Rs. 50, 000/ MT for hex bolt. In the absence of any evidence placed on record with regard to that, the duty paid by the appellant of Rs. 1,04,500 is taken to be corrected as the issuance of these invoices have not been disputed by the Revenue before issuance of the show cause notice. Penalty - HELD THAT:- In the case of Anand Founders Engineers [ 2015 (11) TMI 1166 - PUNJAB HARYANA HIGH COURT ], the jurisdictional Hon ble High Court has taken a contrary view holding that without further investigation, the penalty cannot be imposed, therefore, relying on the decision of the jurisdictional Hon ble High Court - the penalty cannot be imposed on the appellant. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 712
  Refund of CENVAT Credit - inputs and services in question for export - rejection on the ground that as per the said notification the appellant is required to reverse Cenvat credit availed on the services in question before filing the refund claim - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-ST dt. 18.06.2012 - HELD THAT:- The issue decided in the case of M/S. FRESENIUS KABI ONCOLOGY LTD. VERSUS COMMISSIONER, CGST, GURUGRAM [ 2019 (11) TMI 1264 - CESTAT CHANDIGARH] where on similar issue refund was allowed. It is also not disputed that the appellant has not reversed Cenvat credit. The appellant is entitled to claim the refund as filed by them - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 711
  CENVAT credit - input/capital goods - TMT Bars - credit denied on the ground that the TMT bars are not inputs or capital goods for the appellant but are final products which they purchased and further traded - Rule 16(1) of Central Excise Rules, 2002 - reversal of credit on the goods that were brought into the factory - revenue neutrality. Whether finished goods brought into the factory from outside would entitle the manufacturer to take Cenvat credit or otherwise? - HELD THAT:- This issue is no longer res integra as it has been decided in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I VERSUS ICEBERG FOODS LTD. [ 2010 (3) TMI 987 - CESTAT NEW DELHI] and COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD VERSUS DEY S MEDICAL (P) LTD. [ 2009 (12) TMI 387 - CESTAT, NEW DELHI] that Cenvat credit is not admissible on the final products brought into the factory. It has also been decided that the provisions of Rule 16 of Central Excise Rules, 2002 apply to goods which are brought back into the factory for processing, re-conditioning, etc., and not to final products brought in for sale. There are no provision, whatsoever, under CCR, 2004 to allow any manufacturer to avail Cenvat credit on the final products purchased by them from one party and sold to another. CCR provide for credit of duty paid on inputs and capital goods and service tax paid on input services. Undisputedly, the TMT bars in question do not fall under any of these categories. In the absence of any explicit legal provisions for availment of Cenvat credit, the appellant is not entitled to Cenvat credit on TMT bars. Applicability of rule 16 of CER - HELD THAT:- Rule 16 of Central Excise Rules, 2002 do not apply to cases where goods are brought into the factory for resale - This rule applies only to cases where the goods are used for repairing, re-conditioning, etc. Revenue neutrality - HELD THAT:- In the scheme of Cenvat or VAT or present day GST, all taxes paid at various levels get set off at the next level except at the final stage where the customer pays the tax and bears its burden. However, this does not give anyone freedom to choose not to pay their duties or take credit in violation of the Act or rules putting forth the argument that such non payment would be revenue neutral because their customers who would have taken the Cenvat credit will not do so now - Fiscal statutes must be interpreted strictly as they are drafted without an intendment. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 734
  Input tax credit - Interpretation of Statute - Sections 10[3] and 10[4] of the Karnataka Value Added Tax Act, 2003 - availment of input tax credit by the registered dealer based on the annual audit statement of accounts filed in Form VAT 240 notwithstanding no claim made in the return of turnover filed under Section 35 of the Act - Whether the registered dealer is entitled to claim input tax credit under the provisions of the Act on the basis of audit statement in Form VAT 240 sans making such claim in the monthly returns? HELD THAT:- The registered dealer is liable to furnish a return in the Form and manner prescribed and shall pay the tax due on such return within 20 days/15 days after the end of the preceding month or any other tax period as may be prescribed. The tax on any sale or purchase of goods declared in return furnished becomes payable at the expiry of the period of 20 days/15 days without requiring issue of a notice for payment of such tax. The registered dealer is entitled to furnish a revised return within six months from the end of the relevant tax period. It is the deemed assessment based on the return filed by every registered dealer under Section 35 of the Act except in certain cases where the commissioner may notify. The Cognate Bench of this Court in the case of Kirloskar Electricity Co. Ltd., V/s. State of Karnataka and Another, [ 2018 (2) TMI 524 - KARNATAKA HIGH COURT ] , while considering the denial of input tax credit on the premise that the registered dealer has not claimed such input tax credit in that particular period i.e., input tax credit restricted/denied to the registered dealers merely on the ground that sale invoice on the basis of which input tax credit claimed was pertaining to a month or a period prior to the relevant tax period has held that the claim of credit of input tax is indefeasible as was the case of CENVAT under Excise Law and such credit of ITC under VAT law which is equivalent to tax paid in the chain of sales of the same goods, cannot be denied on the anvil of machinery provisions. It is held that the input tax credit cannot be denied only because input tax credit claim is not made in respect of sale invoices which are not pertaining to same tax period, nor it can be denied on the ground that such claim is not made immediately in the month or months following the month of purchase of goods in question. Filing of returns is sine-qua-non to determine the net tax liability under Section 10[3] after deducting the input tax from the output tax. Section 10[4] plays an important role in calculating the amount of net tax to be paid or refunded wherein it is categorically specified that a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with Section 29 and is with the registered dealer taking the deduction at the time, any return in respect of the sale is furnished, except paid under Sub-section [2] of Section 3 i.e., from an unregistered dealer. Return is the basis on which the computation of tax liability has to be made including the input tax credit in terms of Section 10[3] and Section 10[4]. It is not in dispute that no input tax credit has been claimed by the petitioners in any of the return filed during the relevant tax periods, merely on the audited statements filed by the Chartered Accountant/Cost Accountant/Tax Practitioner, no input tax credit can be allowed. If such an argument if accepted, filing of monthly returns would be an empty formality making the provisions of Section 35 to 56 as well as Section 72 of the Act redundant. It is apparent that all the registered dealers are not required to file such Form VAT 240 but only depending on the total turnover for the year, Form VAT 240 has to be filed. In cases where no such VAT 240 is filed, it would certainly result in discrimination if VAT 240 has to be accepted as the basis for determining the input tax credit. VAT Form 240 cannot replace the return . The registered dealers are not permitted to claim the input tax credit on the basis of the VAT Form 240 without filing the return. When the statutory provision mandates compliance in a particular manner, it should be done in that particular way alone not by any other method. Petition dismissed.

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• 2019 (12) TMI 710
  Deemed assessment - Section 27(2)(b) of the U.P. VAT Act, 2008 - absence of any prior notice having been issued to the assessee so as to allow him 15 days time to submit his revised return in terms of Rule 45(13)(a) of the Rules - HELD THAT:- There are no justifiable reason to entertain this review petition. Review petition dismissed.

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• 2019 (12) TMI 709
  Amnesty Scheme - Validity of Government Circular No.3/2019 dated 01/04/2019 - It is the contention of the petitioners that since the provisions of Section 31A of Kerela VAT Act, enable an assessee under the KVAT Act to opt for an Amnesty Scheme for settling their tax, penalty and interest arrears, without any condition - HELD THAT:- Section 31A of the KVAT Act, introduced an Amnesty Scheme so as to enable the assesses under the Act to opt for a settlement of outstanding dues of tax, penalty and interest with a view to ending prolonged litigation in respect of the same. The intention behind introduction of the Amnesty Scheme was to benefit both the assessees as also the State, through an expeditious end to pending litigation, and an expedited recovery of moneys to the State exchequer. The statutory provisions governing the Amnesty Scheme do not provide for a situation where the assessee is precluded from opting for the Amnesty Scheme whenever the Revenue chooses to file an appeal against an order that was passed in favour of the assessee, by any of the statutory authorities in the adjudicatory hierarchy. It follows, therefore, that a Circular by the Tax Department of the State cannot go beyond the statutory provisions under the guise of clarifying the scope of the statutory provisions, which are quite unambiguous and do not require any clarification - the Amnesty applications preferred by the petitioners shall be considered by the respondents, without relying on that portion in the Circular that has been struck off through this judgment. Petition disposed off.

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• Indian Laws

• 2019 (12) TMI 708
  Dishonor of Cheque - section 138 of Negotiable Instruments Act - Complaint against the petitioner who is neither a Director or Party to the agreement - Whether continuation of criminal proceedings against the petitioner is liable to be quashed on account of failure on the part of the complainant to establish any involvement of the petitioner in the dishonour of cheques mentioned above and non issuance of legal demand notice to the petitioner by the complainant? HELD THAT:- It is not disputed that the complainant issued notice to the respondent company as well as two of its directors, being respondent nos. 3 to 5, however, admittedly no notice has been issued to the petitioner under Sections 138 (1) (b) NI Act. As per the aforesaid provision, the payee or the holder in due course of the cheque, as the case may be, shall make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. As per sub clause (c) Section 138 (1) of the said Act, the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Admittedly, in the present case, notice raising demand for payment has not been issued to petitioner by the complainant. Thus, as per the statute, to fasten a liability upon the accused/petitioner, it was mandatory to issue a notice to him under the aforesaid Act, that too within the stipulated period. In the absence of any notice, as stipulated under the Act within the prescribed time period, the summons and proceedings against the petitioner are vitiated and the same deserve to be quashed - petition allowed.

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• 2019 (12) TMI 707
  Disciplinary proceedings - prayer for quashing of charge sheet - principal ground on which the charge-sheet was impugned was that it was extraordinarily belated and the delay itself had caused the Petitioner prejudice - HELD THAT:- In the present case, the Court finds that the complaint of Mr. Satish Kumar Gupta, one of the contractors whose bid was rejected, was received in 2007 itself, but the investigation pursuant to that complaint stretched on till 2015. During this entire period, there was no question of the Petitioner contributing to the delay. In other words, the Respondents have no plausible explanation for an eight years delay in completing even the preliminary enquiry. In the meanwhile, the Petitioner s case for further promotion as Pay and Accounts Officer ( PAO ) was deferred in view of the pendency of the above disciplinary proceedings. The recommendations in regard to the Petitioner s promotion as PAO were kept in a sealed cover. This Court is of the view that the CAT was in error in concluding that no prejudice was caused to the Petitioner on account of the delay in issuing him the charge sheet and that on merits the charge-sheet issued to the Petitioner was justified in law. Petition allowed.

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