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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 20, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Articles E-INVOICING UNDER GST: A GAME CHANGER News FM holds 6th Pre-Budget Consultation with prominent Industrialists FM holds Pre-Budget Consultation with representatives of various Trade Unions and Labour Organisations Notifications Customs 46/2019 - dated 19-12-2019 - ADD Seeks to further amend notification No. 35/2018-Customs(ADD) regarding levy of anti-dumping duty on High Tenacity Polyester Yarn to amend the name of exporter name from " M/s. Oriental Textile (Holding) Ltd.” to “M/s. Oriental Industries (Suzhou) Ltd”. 91/2019 - dated 19-12-2019 - Cus (NT) Exchange Rates Notification No.91/2019-Custom (NT) dated 19.12.2019. DGFT 37/2015-2020 - dated 18-12-2019 - FTP Amendment in import policy and Policy condition under HS code 0713 1000 of Chapter 7 of ITC (HS), 2017, Schedule - I (Import Policy) GST - States ORDER No. 07/2019-State Tax - dated 12-12-2019 - Delhi SGST Delhi Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019 ORDER NO.09/2019 - dated 7-12-2019 - Karnataka SGST Karnataka Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 D.C. (A&R)-2/GST/PWR/STO/Section/2017-18/ADM-8 - dated 11-12-2019 - Maharashtra SGST Delegation of Powers of State Tax Officer-Amendment to Order No. D.C. (A&R)-2/ GST/PWR/Section/2017-18/ADM-8, dated the 5th December 2018 D.C. (A&R)-2/GST/PWR/DC/Section/2017-18/ADM-8 - dated 11-12-2019 - Maharashtra SGST Delegation of Powers of Deputy Commissioner-Amendment to Order No. D.C. (A&R)-2/ GST/PWR/Section/2017-18/ADM-8, dated the 7th April 2018 D.C. (A&R)-2/GST/PWR/AC/Section/2017-18/ADM-8 - dated 11-12-2019 - Maharashtra SGST Delegation of Powers of Assistant Commissioner-Amendment to Order No. D.C. (A&R)-2/ GST/PWR/Section/2017-18/ADM-8, dated the 7th April 2018 KA.NI-2-1743/XI-2-9(47)/17 - dated 13-12-2019 - Uttar Pradesh SGST Amendment in the notification no. KA.NI-2-842/XI-9(47)/17-U.P. Act-1-2017- Order-(09)-2017 dated 30th June, 2017 KA.NI-2-1531/XI-2-9(47)/17 - dated 13-12-2019 - Uttar Pradesh SGST Amendment in Notification no. KA.NI-2-855/XI-9(47)/17-U.P. Act-1-2017-Order-(22)-2017 dated the 30th June, 2017 KA.NI-2-1530/XI-2-9(47)/17 - dated 13-12-2019 - Uttar Pradesh SGST Amendment in Notification no. KA.NI-2-188/XI-9(47)/17-U.P. Act-1-2017-Order-(06)-2019 Dated 24th January, 2019 KA.NI-2-1524/XI-2-9(47)/17 - dated 13-12-2019 - Uttar Pradesh SGST Amendment in Notification No. KA.NI-2-844/XI-9(47)/17-U.P. Act-1-2017-Order-(11)-2017 Dated June 30, 2017 KA.NI-2-1522/XI-2-9(47)/17 - dated 13-12-2019 - Uttar Pradesh SGST Amendment In Notification No. KA.NI-2-687/XI-9(47)/17-U.P. Act-1-2017-Order-(27)-2019 Dated 01 May, 2019 KA.NI.-2-1555/XI-2-9(42)/17 - dated 11-12-2019 - Uttar Pradesh SGST Uttar Pradesh Goods and Services Tax (Thirty Second Amendment) Rules 2019 KA.NI-2-1612/XI-9(47)/17 - dated 9-12-2019 - Uttar Pradesh SGST Amendment in Notification No. KA.NI.-2-983/XI-9 (47)/ 17-U.P. Act-I 2017-Order-(42)-2019 Dated 02 July, 2019 Order No. 09/2019-State Tax - dated 12-12-2019 - West Bengal SGST West Bengal Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 26/2019-State Tax (Rate) - dated 12-12-2019 - West Bengal SGST Seeks to insert explanation regarding Bus Body Building in Notification No. 1135-F.T. dt. 28.06.2017 Income Tax 104/2019 - dated 18-12-2019 - IT Income -tax (15th Amendment) Rules, 2019 Circulars / Instructions / Orders Income Tax 31/2019 - dated 19-12-2019 Order under section 119(2) of the Income-tax Act, 1961- Extension of the due date of payment of tax deducted at source under 194M of the Act FEMA 12 - dated 19-12-2019 Exim Bank's Government of India supported Line of Credit (LOC) of USD 19.5 million to the Republic of Zimbabwe 13 - dated 19-12-2019 Exim Bank's Government of India supported Line of Credit (LOC) of USD 23 million to the Republic of Zimbabwe Customs Public Notice No.:-26/2019 - dated 11-11-2019 Mandatory uploading of import documents in e-sanchit Highlights / Catch Notes GST Classification of goods - rate of tax - Nicotine Polacriliex Lozenge - For a drug to be a medicament, it is essential that there should be a treatment of the illness or disease - it is more aptly classifiable under Chapter Heading 38.24 - Liable to GST @18% Visit to Get Source Income Tax Income -tax (15th Amendment) Rules, 2019 - Report under section 80JJAA - FORM NO. 10DA substituted. Visit to Get Source Order under section 119(2) of the Income-tax Act, 1961- Extension of the due date of payment of tax deducted at source under 194M of the Act Visit to Get Source Reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - The Additional Commissioner is not equivalent to the rank of Commissioner or any other designation as defined u/s 151 (1) - The notice is bad in law and is required to be quashed and the same is quashed Visit to Get Source Exemption u/s 54 - residential house property - how much area of the total plot area to be considered land appurtenant thereto - Both the authorities below have concurred that 25% of the total plot area to be considered land appurtenant thereto. - Additions sustained. Visit to Get Source Assessment u/s 153A - Addition made on account of Client Code Modification(CCM) - it is an admitted fact that the assessee is not a member of any exchange and cannot execute CCM and the transactions on account of CCM done by the group concerns are not found to be false or untrue - SEBI or the stock exchange has not taken any action treating the transactions to be non genuine - Additions deleted. Visit to Get Source Disallowance u/s 10(10A)(ii) - Commuted Pension - Though, generally the retrial benefits are paid on retirement from service, however, under certain circumstances, employment may be continued subject to payment of retrial benefits - AO was not justified in disallowing the claim of the assessee u/s 10(10A)(ii). Visit to Get Source FTS received by the assessee from rendering of technical services - such income by way of FTS is to be subjected to tax @ 10% under article 12 of the treaty and cannot be subject to tax @ 20% as contemplated by the AO. Visit to Get Source Bogus LTCG/losses derived from transfer of shares - Unexplained cash credits u/s 68 - Hon’ble high court’s have adopted varying opinions qua correctness of identical long term capital gains. - In the absence of any decision from the jurisdictional high court, view in favor of assessee adopted. Visit to Get Source Customs Mandatory uploading of import documents in e-sanchit Visit to Get Source Provisional assessment - ship demurrage charges - if the assessment is left open for questions of valuation, and subsequently it is found that the classification also requires a change or some other licencing requirement has to be examined, all these factors must be examined while finalizing the provisional assessment. There cannot be a provisional assessment which is provisional for one purpose and not provisional for other purposes. Visit to Get Source Jurisdiction - SEZ unit / area - power of Custom Officer of search and seizure - Customs Authorities have no jurisdiction to deal with gold imported by unit located in SEZ. Visit to Get Source Classification of imported goods - cut solar cells - during some cells are damanged - doubt about import of scrap and waste - the burden of classification is on the Department and in the present case - The imported solar cells are precise in nature and therefore there is always likelihood of some damage during the process of transit - The Customs authorities directed to release the consignments Visit to Get Source Conviction of sentence - fist time offender - the reliance placed by the Magistrate for passing special sentence less than statutory minimum punishment per se appears to be in violation of the provisions of the Customs Act and therefore, the same is liable to be interfered with. Visit to Get Source DGFT Amendment in import policy and Policy condition under HS code 0713 1000 of Chapter 7 of ITC (HS), 2017, Schedule - I (Import Policy) Visit to Get Source FEMA Exim Bank's Government of India supported Line of Credit (LOC) of USD 19.5 million to the Republic of Zimbabwe Visit to Get Source Central Excise Recovery of erroneously granted refund - The department, once the adjudication has taken place u/s 11B, cannot proceed to recover on the basis of “erroneous refund” u/s 11A so as to enable the refund order to be revoked, as the remedy lied u/s 35E for applying to the Appellate Tribunal for determination and not invoking Section 11A. Visit to Get Source VAT Re-assessment - Once the matter of the assessee for previous year was accepted by the Tribunal as far as the capital goods are concerned, which were outside the Composition Scheme, the respondent authority was not correct to pass order of authorisation under subsection 7 of Section 29 for the re-assessment, as the same had attained finality and was binding Visit to Get Source Valuation - sale of Gypsum - mere bifurcation of the sale price of the goods in a mutual contract between the parties under a separate bargain or even a common bargain will not be material and so long as the contract of sale is "F.O.R. Destination" and the contract of sale of goods results in the transfer of property of goods at the door steps of the buyer, all pre-sale expenses incurred by the selling dealer will be part of the sale price or taxable turnover. Visit to Get Source Case Laws: GST 2019 (12) TMI 839 Release of seized goods alongwith vehicle - direction to the 1st respondent to consider Ext.P10 objection and to hear the petitioner before finalising the proposal for imposition of penalty against the petitioner - HELD THAT:- The writ petition disposed off with a direction to the 1st respondent, before whom Ext.P10 objection has been filed by the petitioner, to consider the objection of the petitioner and also hear the petitioner before finalising the penalty proceedings under Section 130 of the GST Act. 2019 (12) TMI 838 Detention of goods - detention on the ground that e-way bill was raised in favour of a consignee who had a GSTIN number, and was a defaulter in the filing of returns for almost 27 months - HELD THAT:- The detention of the goods cannot be said to be unjustified. The 2 nd respondent are directed to release the goods and vehicle to the petitioner on the petitioner furnishing a bank guarantee to cover the tax and penalty amounts determined in Ext.P3(d) notice. The 2nd respondent shall thereafter forward the file for adjudication under the CGST Act. Petition disposed off. 2019 (12) TMI 837 Transfer of accrued credit - transition/migration to GST regime - Sections 139 to 143 of the Act and Rule 117 of the SGST Rules - HELD THAT:- Since it is not in dispute that the petitioners herein did attempt to upload the necessary details in the system maintained by the respondents, and it cannot be disputed, based on a perusal of the system log, that the petitioners did attempt to log into the system, the mere fact that the petitioners cannot establish that the inability to upload the required details was on account of a system error that was occasioned by the respondents, cannot be a reason for denying them the substantive benefit of carrying forward the credit earned by them under the erstwhile regime. Writ petitions were allowed and a direction was issued to the respondents to permit the petitioners therein to file the TRAN -1 Form, either electronically or manually on or before 31.12.2019 without prejudice to the right of the respondent statutory authorities to verify the genuineness of the claim of the petitioners - petition allowed. 2019 (12) TMI 836 Validity of assessment order - recovery of amounts - In the writ petition, it is its case that the assessments have been concluded against it without taking note of the returns filed by it, which would have indicated the extent of the turn over that could have been subjected to assessment. Contrary to this, the assessments have been completed by relying on past assessments of the petitioner, thereby resulting in an exaggerated demand against the petitioner - HELD THAT:- Exts.P24 and P25 orders have been passed in terms of Section 62 of the CGST Act, after finding that the petitioner had not furnished the necessary returns within the time contemplated under the Act for filing the same. It was therefore that the assessments were completed on best judgment basis as against the petitioner. It is also found from the assessment orders impugned that, had the petitioner availed the opportunity of furnishing the returns within a period of 30 days from the date of the aforesaid assessment orders, the assessment would have been automatically withdrawn and the petitioner would have obtained a fresh opportunity to produce the relevant material for the purposes of a proper assessment. The said facility was not, however, availed by the petitioner for reasons best known to it. The only alternative for the petitioner is to approach the statutory Appellate Authority through an appeal against Exts.P24 and P25 assessment orders. The challenge in the writ petition against Exts.P24 and P25 orders cannot be maintained in view of the availability of an effective alternate remedy against the assessment orders impugned herein because the assessment orders do not suffer from any jurisdictional error or violation of the rules of natural justice - recovery steps for recovery of amounts confirmed against the petitioner by Exts.P24 and P25 assessment orders shall be kept in abeyance for a period of three weeks so as to enable the petitioner to move the Appellate Authority through an appeal against Exts.P24 and P25 assessment orders in the mean while. 2019 (12) TMI 835 Detention of consignment of goods - E-Way Bill that accompanied the consignment of goods had expired - HELD THAT:- The detention of the goods cannot be said to be unjustified - Taking note of the submission of counsel for the petitioner that he is prepared to furnish security for the release of the consignments, it is directed that if the petitioner furnishes a bank guarantee for the tax and penalty amounts determined in Ext.P6 notice, then the 1st respondent shall release the goods to the petitioner. Petition disposed off. 2019 (12) TMI 834 Profiteering - purchase of flats - it is alleged that the Respondent had not passed on the benefit of input tax credit (ITC) to them by way of commensurate reduction in prices - net additional benefit of ITC accrued to the Respondent - contravention of section 171 of CGST Act - Penalty - HELD THAT:- It is established from the perusal of the above facts of the case that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondents as he has profiteered an amount of ₹ 1,40,41,916/-which includes both the profiteered amount @1.65% of the base price and GST on the said profiteered amount from the above Applicants and the other recipients as well who are not Applicants in the present proceedings. Accordingly, the above amounts shall be paid to the Applicant No. 1 to 4 and the other eligible house buyers by the Respondents along with interest @18% PA from the date from which these amounts were realised from them till they are paid as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017, failing which they shall be recovered by the concerned Commissioner CGST / SGST and paid to the eligible house buyers From the above discussion it is clear that the Respondent has profiteered by an amount of ₹ 1,40,41,916/- during the period of investigation. Therefore, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce/refund the price to be realized from the buyers commensurate with the benefit of ITC received by him as has been detailed above. The present investigation is only up to 31.12.2018 therefore, any additional benefit of ITC which shall accrue subsequently shall also be passed on to the buyers by the Respondent. In case this additional benefit is not passed on to the Applicant No. 1 to 4 or any Other buyer they shall be at liberty to approach the State Screening Committee Haryana for initiating fresh proceedings under Section 171 Of the above Act against the Respondents. The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future. Penalty - HELD THAT:- Respondent has denied the benefit of ITC to the buyers of the flats/shops being constructed by him and has profiteered in contravention of the provisions of Section 171(1) of the CGST Act, 2017. Therefore he is liable for imposition of penalty under Section 171(3A) of the CGST Act, 2017 - Therefore, 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. 2019 (12) TMI 806 Classification of goods - rate of tax - Nicotine Polacriliex Lozenge - 100% EOU - applicability of N/N. 012017-Central Tax (Rate) dated 28.06.2017 - Condonation of delay in filing appeal - Section 100(2) of the CGST Act - the AAR held that the only alternative left for the classification of the instant product is Chapter Heading 38.24 - HELD THAT:- The provisions of Section 100(2) of the CGST Act mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in terms of the proviso to Section 100(2) of the said Act, the Appellate Authority is empowered to allow the appeal to be presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days - In the instant case, the appeal filed against the Advance Ruling order dated 07 08.2019 is evidently belated by 57 days. The appellant, however, has not explained the reason for the delay in filing the appeal. Be that as it may, in the interest of justice, and considering the fact that the delay is within the condonable powers of this Authority, we are inclined to suo moto condone the delay in filing this appeal and proceed with a decision on the merits of this case. Classification of goods - whether the product can be considered as a medicament having therapeutic and prophylactic uses? - HELD THAT:- The word medicament has not been defined in the Customs Tariff Act or in the Drug and Cosmetics Act. A common understanding and dictionary meaning of medicament is a substance which treats illness and diseases - Nicotine Polacrilex is used as a stop smoking aid which reduces withdrawal symptoms, including nicotine craving, associated with quitting smoking It is pertinent to note that the use of Nicotine Polacrilex is indicated as merely an aid to stop smoking and a drug which reduces withdrawal symptoms in those who desire to quit smoking. It appears that the drug Nicotine Polacrilex does not in any way treat the symptoms of nicotine cessation. For a drug to be a medicament, it is essential that there should be a treatment of the illness or disease - In the instant case, the product Nicotine Polacrilex Lozenge is only a preparation which assists smokers to stop smoking It is a replacement therapy for addicted smokers to wean them away from the smoking habit Use of Nicotine Polacrilex lozenge will satisfy the nicotine craving of the smoker as measured doses of nicotine are administered into the blood stream The Nicotine replacement therapy ensures that the harmful effect of cigarette smoking is minimized in a smoker who will gradually stop the smoking habit. Classification of the product Nicotine Polacrilex Lozenge - HELD THAT:- While the Rate Notification under GST provides the rate of tax on goods and services, in order to interpret these Rate Notifications for purposes of levy of GST, one has to read the same along with the First Schedule of the Customs Tariff Act, 1975 (including the Section and Chapter Notes and General Explanatory Notes). The Customs Tariff is structured into Sections, Chapters and sub-chapters, Headings and sub-headings. Chapter 30 of the Customs Tariff Act, 1975 relates to Pharmaceutical products . Chapter Note 1 to Chapter 30 lists out the goods which are excluded from the purview of Chapter 30. As per Chapter Note 1(b), Chapter 30 does not cover preparations, such as tablets, chewing gum or patches (transdermal systems) intended to assist smokers to stop smoking (heading 2106 or 3824) Therefore, any preparation which is intended to assist smokers to stop smoking is excluded from the coverage of Chapter 30. The preparations may be in the form of tablets, chewing gum or patches. In this case, the impugned product is in the form of a Lozenge - Admittedly a lozenge is not a tablet or chewing gum or a patch However, the use of the words such as in the Chapter Note 1(b) signifies that it is only indicative and not exhaustive. The active ingredient in Nicotine Polacrilex Lozenge is Nicotine which is a natural alkaloid. Nicotine is bound to an ion-exchange resin (polymethacrilic acid) and administered in the form of tablets, chewing gum, lozenge or patches The chemical formulation of the nicotine bound to the resin polacrilexis such that it provides the user of the product blood nicotine levels via buccal absorption that will approximate those produced by the inhalation of tobacco smoke - the Nicotine Polacrilex Lozenge is a chemical preparation and hence is more aptly classifiable under Chapter Heading 38.24 of the Customs Tariff Act, 1975. In the GST rate Notification No 01/2017-Central Tax (Rate) dated 28.06.2017, the Prepared hinders for foundry moulds or cores; Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included falling under Chapter Heading 38.24 are covered under entry SI.No 97 of Schedule III with a GST rate of 18%. The ruling of AAR upheld. Income Tax 2019 (12) TMI 833 Reopening of assessment u/s 147 - reasons to believe - interest on borrowed capital from sister concerns - HELD THAT:- Special leave petition is dismissed on the ground of low tax effect. 2019 (12) TMI 832 Revision by CIT u/s 263 - disallowance u/s 14A ; undervaluation of the closing stocks; interest on borrowed funds w.r.to interest free loan to its sister concerns; and commission on sales - CIT also directed that AO is free to examine any other issues which have not been covered in this order except those issues which have already been considered and decided by the CIT (A) - ITAT held that it was incumbent upon the CIT to have shown as to how the assessment order was prejudicial to the interest of the Revenue and this had to be done on the basis of an assessment of the material on objective criteria and quashed the revision also confirmed by HC - HELD THAT:- Special leave petition is dismissed. 2019 (12) TMI 831 Doubtful advances and debts as allowable deduction u/s 115JB - HELD THAT:- Question can be answered in favour of the revenue and against the assessee by virtue of the retrospective amendment of section 115JB explanation (1)(i) with effect from 1st April 2001. We answer the question accordingly. Customs duty exemption - mercantile system of accounting - income of the year of incremental growth in FoB value of exports of the year of receipt of certificate/licence - HELD THAT:- Under a customs notification dated 8th April 2005 the goods imported against a duty credit certificate issued under the target plus scheme in the relevant foreign trade policy were exempted from duty. This duty credit certificate was issued to star export house on the basis of incremental growth in FOB value of exports made during the financial year 2003-2004. The respondent assessee was following the mercantile system of accounting. It had accounted for the amount representing the exemption from duty in the accounts of the financial year in which the certificate was issued. This has been disallowed by the income tax authority. Assessing Officer, the Commissioner of Income Tax (Appeals) and the tribunal ruled in favour of the assessee. 2019 (12) TMI 830 Deduction u/s 10B(2)(ii) and 10B(2)(iii) - HELD THAT:- The controversy involved in this appeal is squarely covered by a judgment in M/S TRIDENT MINERALS [ 2018 (12) TMI 640 - KARNATAKA HIGH COURT] . In view of the aforesaid submissions and for the reasons assigned in the aforesaid judgment, substantial question of law No.1 is answered against the Revenue and in favour of the assessee. Computation of loss - Tribunal is right in holding that the loss should be allowed at 3% of the total quantity and not on the quantity of wastage, as computed by the Assessing Authority? - HELD THAT:- The aforesaid substantial question of law which has been framed by a bench of this Court is not a question of law, but is a question of fact as it pertains to the weight of loss on total quantity. Therefore, we are not inclined to answer the same. 2019 (12) TMI 829 Reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - HELD THAT:- Admittedly, the impugned notice u/s 148 was issued in respect of Assessment Year 2002-03, which is clearly after four years from the end of the relevant assessment year. The contention of learned counsel for the parties is not acceptable. The Additional Commissioner is not equivalent to the rank of Commissioner or any other designation as defined under Section 151 (1) of the Act. Therefore, the impugned notice (Annexure-1), which has been issued to the petitioner, is bad in law and is required to be quashed and the same is quashed. Rule is made absolute to the aforesaid extent. 2019 (12) TMI 828 Exemption u/s 54 - residential house property - how much area of the total plot area to be considered land appurtenant thereto - assessee is dental surgeon by profession and is Professor in Medical College - case of the assessee was selected for framing scrutiny assessment by Revenue u/s 143(3) read with Section 143(2) - HELD THAT:- It is admitted by assessee before the authorities below that assessee is having a social standing. The assessee is running its clinic from one of the best localities of Chennai namely T.Nagar. Thus, assessee is a man of means having high social status and standing. The investments u/s 54 of the 1961 Act are required to be made in buildings or lands appurtenant thereto , being a residential house and we have already seen definition of residential house as above in this order. Therefore , only land which is appurtenant to residential house can be considered for claiming deduction u/s 54. This is a question of fact which requires investigation into facts and the facts may differ from case to case. The land may be integral part but the same may not necessarily be appurtenant to the building thereon as the same may not be required for enjoyment of the Building situated on the land. We are of the considered view that Revenue has rightly placed reliance on decision of Smt. Asha George v. ITO [ 2013 (1) TMI 545 - KERALA HIGH COURT] and in the case of CIT v. Zaibunnissa Begum (1985) [ 1984 (7) TMI 62 - ANDHRA PRADESH HIGH COURT] The assessee holds plot of land of 4973.125 square feet. It has building existing of 220 square feet on said plot of land which is even less than 5% of the total plot of land . Thus, it could not be said that rest of the plot of land is appurtenant thereto the building of 220 square feet existing on said plot of land for enjoyment of the said building. The assessee has claimed that there is open space which is used for car park, septic tank, garden etc. . No doubt, these open spaces may be integral part but certainly these are not required to enjoy building existing of 220 square feet on plot of land of 4973.125 square feet. How much land should be treated as appurtenant thereto is a question of fact and depends upon facts and circumstances of the case and in each case , the facts may differ . Both the authorities below have concurred that 25% of the total plot area to be considered land appurtenant thereto. These may require estimation which may involve guess work and it could not be said that estimation done by authorities below in instant case is perverse or without any reasonable basis. We are not inclined to interfere with the decision taken by both the authorities below as we have observed that estimation done by authorities below is honest and reasonable estimates based on facts of the case and could not be said to be a perverse view taken by authorities below. Our above view is strengthened by Decision of Hon ble Supreme Court in the case of Kachwala Gems v. JCIT [ 2006 (12) TMI 83 - SUPREME COURT] - Decided against assessee. 2019 (12) TMI 827 Disallowance of deduction u/s. 80IA on ICDs/CFS which are Inland ports - HELD THAT:- This issue is squarely covered by the decision of CIT vs. Container Corporation of India Ltd. [ 2018 (5) TMI 359 - SUPREME COURT] in which the Hon ble Supreme Court of India has adjudicated the similar issue against the Revenue as held ICDs are Inland Ports and subject to the provisions of the Section and deduction can be claimed for the income earned out of these Depots. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places Depreciation on intangible assets being value of License acquired from the Indian Railways for running container trains on Indian Railways - HELD THAT:- The issue is squarely covered by the decision of the ITAT for the assessment year 2010-11 in assessee s own case [ 2018 (9) TMI 142 - ITAT DELHI] hold that assessee is eligible for depreciation @ 25% on the intangible asset acquired by it, hence, the same is allowed and accordingly, the ground no. 2 raised by the assessee is allowed. Deduction on account of advance lease rent paid for the land taken on long term lease for business purposes on pro rata basis - HELD THAT:- In assessee s own case [ 2018 (9) TMI 142 - ITAT DELHI] dispute is set aside to the file of the AO with the direction to assessee to furnish all requisite details in respect of the claim of depreciation. The AO shall then verify the details to determine whether the claim of the assessee is allowable or not as per law. 2019 (12) TMI 826 Penalty u/s 271(1)(c) - application for condonation of delay - HELD THAT:- Once sufficient material is available on record and assessee made a request for condonation of delay in statement of facts, that is sufficient for Ld. CIT(A) to deal with the submission of the assessee whether to the condone the delay in filing the appeal or not ? Therefore, such is not a relevant reason to reject the claim of assessee. Considering the above discussion, it is clear that appeal of assessee was filed within the period of limitation. Therefore, there is no occasion for the CIT(A) to hold that appeal of assessee is time barred and should not be admitted to decide on merits. In this view of the matter, we set aside the impugned order of the CIT(A) and hold that appeal filed by the assessee before the Ld. CIT(A) is within the time. Accordingly, appeal of assessee is restored to the file of CIT(A) with a direction to re-decide the appeal of assessee on merits and in accordance with law, by giving reasonable, sufficient opportunity of being heard to the Assessee and the A.O. Accordingly, appeal of Assessee is allowed for statistical purposes. 2019 (12) TMI 825 Reopening of assessment u/s.147 - Notice issued by ITO who had no jurisdiction over the assessee - HELD THAT:- We find that the assessee has filed his return of income on 25-11-2009 showing address as Plot No. 197, Saurabh Society, Opp. DIP Kiran Society, Gunjan, Vapi, Gujarat with Income Tax Officer, Ward- 1, Vapi. Thus, the assessee himself stated his jurisdiction with Income Tax Officer, Ward- Vapi. The PAN database also shown same address. Therefore, notice u/s 148 has been validly issued by the AO, who was having correct jurisdiction once the assessee on correct address as per address shown in return of income. There is no evidence on record whether the assessee has intimated change of address.Therefore, where the assessee not intimated change of address and not carried out change in PAN database, the AO has correctly exercised his jurisdiction for issue of notice under section 148 of the Act. Addition being cash deposits by the assessee in bank account with ICICI Bank Ltd. - HELD THAT:- Agricultural land holding is sufficient but same is appearing in the Revenue records in the name of various family members of the assessee being his father who is 95 years old, mother who is 90 years old and one non-resident brother who is residing in London. Thus, the facts remains that the agricultural land holding is hereditary agricultural land and standing in the name of various members of the HUF, including the assessee,on which agricultural operations is being carried out by the assessee and expenses thereon being incurred by the assessee and sale proceeds of same has been used for cash deposits in bank account by the assessee. Since the assessee is the only person looking after financial affairs of the family therefore, it is but natural that sale proceeds of agricultural products have been used for cash deposits in his bank account. Therefore, considering the agricultural land holding of the family, bills of agriculture products, and the assessee is only person who looking after financial affairs and circumstantial surrounding circumstances, we are of the considered opinion that said agricultural income has been used for cash deposits made in the ICICI Bank account. In view of this matter, the addition sustained by the Ld. CIT (A) is therefore, deleted. This ground is therefore, allowed. Addition on account of bank interest from S/B account of ICICI Bank Ltd. - HELD THAT:- AO made addition of interest of ₹ 1, 306 from ICICI bank, ₹ 1, 340 from Bank of Baroda, ₹ 3, 997 from Union Bank of India as same was not shown by the assessee. These were agreed to be added. However, in appeal these were contested as bank interest up to ₹ 10,000 is exempt under section 80L of the Act. However, CIT (A) held the provision of section 80L was omitted with effect from 01.06.2006 and equivalent provision was introduced u/s. 80TTA with effect from 01.04.2013. Hence, confirmed the same. In view of these circumstances and facts that the assessee has agreed for addition during the course of assessment proceedings, we do not find any merit in this ground, hence, it is dismissed. Reopening of assessment u/s.147 and issue of notice under section 148 - HELD THAT:- We hold the reopening of assessment as valid and in accordance with law. So far, reliance on the decision of Co-ordinate Bench of tribunals as above, we note that in said decisions, the AO had not made any preliminary enquiries regarding source of cash deposits in bank account. In view of these facts, the above-cited decisions are distinguishable on fact and in law hence, the ratio of the same is not applicable. Further, in the case of Raymond Woollen Mills Ltd. v. ITO [ 1997 (12) TMI 12 - SUPREME COURT ] held that in determining whether commencement of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at such stage. Considering all the circumstances, we are of the considered opinion that the AO was justified in reopening of assessment. Accordingly, same is upheld. This ground is therefore, dismissed. 2019 (12) TMI 824 Late filing fees u/s 234E and interest on account of late payment - The said fee u/s 234E was levied on account of late filing of quarterly electronic TDS return, as provided u/s 200(3) of the Act read with Rule 31A of the Income Tax Rules - Scope of amendment - HELD THAT:- As rightly observed by co-ordinate bench in para-17, the decision of Hon ble Bombay High Court in Rashmikant Kundalia v. Union of India [ 2015 (2) TMI 412 - BOMBAY HIGH COURT ] deal only with examining the constitutional validity of provisions of section 234E of the Act and do not deal with effect of amendment in Section 200A w.e.f. 01.06.2015. We hold that view favorable to the assessee was to be adopted and therefore, the levy of fees u/s 234E for any period prior to 01/06/2015 would not be sustainable in the eyes of law. We order so. See MEDICAL SUPERINTENDENT RURAL HOSPITAL DODI BK AND JUNAGADE HEALTHCARE PVT. LTD. [ 2018 (10) TMI 1587 - ITAT PUNE] So far as the levy of interest of ₹ 1,485/- is concerned, the same being mandatory and consequential in nature, would require no interreference on our part. The action of revenue in levying the same is upheld. 2019 (12) TMI 823 Enhancing the addition u/s.251(10) - cash deposited in Bank accounts treated as alleged unexplained cash deposits - HELD THAT:- We find that the bank account of the assessee is showing cash deposits and simultaneously cash withdrawals within a day or today. Therefore, the entire cash deposits cannot be treated as unexplained as there is the debit and credit on both account. It is further discernable from the pattern of cash deposit as reflected from the bank account that these deposits are simultaneously being withdrawn. Therefore, in such a situation the only course of action is to consider the peak balance for addition, which is supported by various decisions cited by ld. counsel. We find that the peak balance as on 18- 09-2019 is at ₹ 1,68,025/- accordingly the addition of ₹ 40,81,465/- is restricted to peak balance of ₹ 1,68,025/-. Accordingly, all the above grounds of appeal are partly allowed. Penalty u/s 271(1)(c) - HELD THAT:- Penalty u/s.271(1)(c) was initiated for furnishing inaccurate of particular of incomes, whereas the penalty has been imposed by the AO on account of concealment of income. Therefore, the penalty is not tenable in law, in the light of decision of Hon ble Bombay High Court in the case of CIT v. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT ] wherein it was held that where the AO was initiated penalty proceedings for furnishing inaccurate particulars of income and imposing penalty for concealment of income, the order imposing penalty had to be made only on ground of which penalty proceedings had been initiated and it could not be on fresh ground of which assessee had no notice, penalty has to be deleted. Penalty levied u/s.271(1)(c) is not sustainable in law as no specific charge was levied, hence it is cancelled. Accordingly, the appeal of the assessee is allowed. 2019 (12) TMI 822 Disallowance of deduction u/s 54B - Validity of assessment framed by the AO for want of jurisdiction to take up the issue of disallowance of deduction u/s 54B without having necessary approval of conversion of limited scrutiny to comprehensive scrutiny - HELD THAT:- In the proceedings for limited scrutiny the AO was satisfied with the source of increase in the capital of the assessee and even did not proceed further after the reply and documents filed by the assessee in response to the notice u/s 142(1) dated 4-07-2016. Only after dropping the said notice, the AO issued fresh notice u/s 142(1) on 25-11-2016. The AO has finally made addition only on account of disallowance of deduction u/s 54B. Therefore, at the time of initiating the complete scrutiny, the issue under limited scrutiny was not pending with the AO as he was satisfied with the reply and documentary evidence on the said issue. In the case in hand, the AO has not intimated the assessee about the conversion of limited scrutiny to complete scrutiny which is a serious violation of the instructions issued by the CBDT. AO has taken up the issue and initiated proceedings for complete scrutiny without necessary approval with him. Therefore, the issue taken up by the AO regarding disallowance of deduction u/s 54B is prior to the necessary approval communicated to the AO and therefore, in the absence of communication in writing to the AO about the approval, the assumption of jurisdiction by the AO is invalid. Consequently, the addition made by the AO by denying the deduction u/s 54B is not sustainable and the same is deleted. - Decided in favour of assessee. 2019 (12) TMI 821 Delay in filing Miscellaneous Application - Miscellaneous Application filed belatedly with a delay of 546 days - HELD THAT:- When there is no provision of condonation of delay for filing of the Miscellaneous Application, then the Miscellaneous Application filed belatedly is not maintainable being barred by limitation provided under section 254(2) of the Act and accordingly the same is dismissed. 2019 (12) TMI 820 Assessment u/s 153A - suppression of income - Addition made on account of Client Code Modification(CCM) - HELD THAT:- Client code modification is permitted intraday, i.e. on the same day. As per Commodity Exchange, if client code modification is upto 1% of the total orders, there is no penalty and if it is greater than 1% but less than 5%, the penalty is ₹ 500/-. If it is greater than 5% but less than 10%, penalty is ₹ 1000/- and if it is greater than 10%, then penalty is ₹ 10,000/-. From the above, the only inference that can be drawn is that as per MCX, the client code modification upto 1% is absolutely normal and therefore, the broker is permitted to modify the client code upto 1% without paying any penalty. Even client code modification upto 5% is not considered unusually high because that is also permitted with the token penalty of ₹ 500/-. CIT(A) has given the number of transactions entered into by the assessee for the period 2004-05 to 2007-08 and the number of client code modification and percentage thereof. We have also reproduced the same at paragraph No.6 of our order. From the said details, it is evident that the client code modification was done in four years 36,161 times. As an absolute figure, the client code modification may look very high, but if we look it at in terms of total transactions, it is only 0.94%. The total number of trade transactions is 38.58 lacs and the client code modification is only 36,161. Therefore, the client code modification is less than 1% of the total trading transactions. As per circular of Commodity Exchange, client code modification upto 1% is quite normal and is permitted without any penalty. AO has not given any reason on what basis he presumed the client code modifications to be unusually high. In the light of the MCX circular, we are of the opinion that the client code modification was quite nominal and not unusually high as alleged by the AO. Since in the instant case it is an admitted fact that the assessee is not a member of any exchange and cannot execute CCM and the transactions on account of CCM done by the group concerns are not found to be false or untrue and since SEBI or the stock exchange has not taken any action treating the transactions to be non genuine and volume of CCM occurred are within the permissible limit allowed by the SEBI, therefore we are of the considered opinion that there is no perversity in the order of the CIT(A) deleting the addition. - Decided against revenue. 2019 (12) TMI 819 Disallowance u/s 14A - Sufficiency of own funds - HELD THAT:- Only the own funds had been utilized for making investments that had yielded exempt income and hence, there cannot be any disallowance of interest on borrowed funds u/s.14A of the Act. Reliance in this regard was placed on the decision of Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . We find that with regard to disallowance of indirect expenses, the Co-ordinate Bench of this Tribunal in assessee s own case [ 2011 (9) TMI 635 - ITAT MUMBAI] had remanded this issue to the ld. AO for fresh consideration. The ld. AO vide order dated 09/01/2013 in giving effect proceedings to the said Tribunal order had followed the computation mechanism as was given by the Tribunal for the A.Y.2006-07. In other words, the computation methodology adopted by the assessee which was submitted during the course of assessment proceedings for A.Y.2006-07 i.e. the year under appeal before us before the ld. AO was practically adopted by the ld. AO in giving effect proceedings to Tribunal order for A.Y.2001-02. Hence, the workings of disallowance u/s.14A of the Act given by the assessee before the ld. AO towards disallowance u/s.14A of the Act in the sum of ₹ 59,06,284/- had become final and deserves to be upheld. Set off of unabsorbed depreciation of earlier years while deduction u/s.80IA - HELD THAT:- covered in favour of the assessee by the decision of the Hon ble Supreme Court in the case of ACIT vs. Velayudhaswamy Spinning Mills Pvt. Ltd [ 2016 (11) TMI 373 - SC ORDER] wherein the SLP filed by the revenue against the order of the Hon ble Madras High Court was dismissed by holding that loss in years earlier to initial assessment year which were already absorbed against profit of other business cannot be notionally brought forward and set off against profits of eligible business in the Initial Assessment Year as no such mandate is provided in Section 80IA(5) of the Act. It is not in dispute that A.Y.2006-07 is the Initial Assessment Year in respect of Jojo Bera unit in terms of Section 80IA(5) of the Act. It is not in dispute that Jojo Bera Unit is an eligible undertaking and is entitled for claim of deduction u/s.80IA of the Act. We also find that the recent Circular issued by the CBDT vide Circular No.1/2016 dated 15/02/2016 also had endorsed the view taken in the case of Velayudhaswamy Spinning Mills supra and had directed the revenue to withdraw the said ground before various appellate forums. Deduction on prepayment of debentures and its related impact while computing deduction u/s.80IA - HELD THAT:- We direct the ld. AO accordingly to give life to the issue of allowability of deduction towards premium on prepayment of debentures based on the final outcome of the appeals of the revenue for the Asst Years 2004-05 and 2005-06. The ground Nos. 3(a) to 3(d) raised by the assessee are disposed off subject to the directions mentioned hereinabove. Disallowance u/s.40A(9) of the Act in respect of payments made to local schools in the locality in which eligible undertakings are situated - HELD THAT:- As decided in STATE BANK OF INDIA [ 2019 (6) TMI 1183 - BOMBAY HIGH COURT] assessee is entitled for deduction in the sum of ₹ 38,85,333/- in respect of payments made to schools in which children of the employees of the assessee are studying, among others. Disallowance of discount on issue of Euro Bonds - HELD THAT:- AO had observed that in earlier year, the assessee had earned some gain out of this transaction and the same had not been offered to tax as it is notional in nature. We are unable to persuade ourselves to accept to the contentions of the ld. AO that assessee had made certain foreign exchange fluctuation gain in the earlier year which was not offered to tax by the assessee on a totally different footing, whereas the subject mentioned issue in dispute being liability of discount on issue of Euro notes, which has got absolutely nothing to do with the foreign exchange gain which arose in earlier years. Hence, we hold that the ld. AO had grossly erred in disallowing the said sum of ₹ 18,88,103/- towards discount on issue of Euro notes. We find that the action of the assessee is exactly in line with the ratio laid down by the Hon ble Supreme Court in the case of Madras Industrial Investment Corporation [ 1997 (4) TMI 5 - SUPREME COURT] . Accordingly, ground No.3 raised by the revenue is dismissed. Disallowance u/s.40a(ia) - payment of retention amount - HELD THAT:- The comments made by the Tax Auditors in the tax audit report that tax has not been deducted at source by the assessee at the time of payment of retention amount was in respect of a solitary case of payment made to United Shippers Ltd, where payments were made during the year by the assessee without deduction of tax at source since adhoc payments were made without reconciliation of the amount finally payable to the party. The assessee had even submitted evidence that even in this case i.e. United Shippers Ltd, the short fall of tax amounting to ₹ 11,21,342/- was indeed remitted to the account of Central Government on 07/03/2006 which is before the end of the previous year relevant to A.Y.2006-07. We find that in any case, the ld. AO is absolutely not justified to take the figure of sundry deposits from the balance sheet and treat the same as retention money and thereafter treat 50% of the said sum as retention money. The entire exercise of the ld. AO is absolutely without any basis. We hold firstly that there is absolutely no default committed by the assessee in accordance with provisions of Chapter XVIIB of the Act in the instant case. Secondly, the figures taken by the ld. AO are totally incorrect. Hence, by all force, the disallowance u/s.40(a)(ia) of the Act deserves to be deleted which has been rightly done by the ld. CIT(A) on which action, we do not find any infirmity. Direction of ld. CIT(A) to ld. AO to decide the issue as per the report of ITO International Transaction in respect of TDS on payment to foreign parties - HELD THAT:- We find that the ld. AO cannot have any grievance on this direction as admittedly the ld. AO had been merely directed to follow the order passed by ITO International Transaction, TDS Range-2, Mumbai. It is also pertinent to note that the ld. AO had passed an order dated 13/05/2013 giving effect to the order of the ld. CIT(A) wherein he had merely followed the directions of ITO International Transaction, TDS Range-2, Mumbai and granted some relief to the assessee u/s.40(a)(i) of the Act. We find that assessee had not preferred further appeal to this Tribunal against the findings of International Transaction, TDS Range-2, Mumbai. Hence, we do not find any merit in the ground No.5 raised by the revenue and hence, the same is dismissed. Disallowance of prior period expenses - HELD THAT:- In the instant case there is no dispute that the entire expenses got crystallized during the year under consideration and hence, we do not find any infirmity in the order of the ld. CIT(A) granting deduction towards prior period expenses to the assessee. Accordingly, ground No.3 raised by the revenue is dismissed. Rectification of mistake - double deduction - Reduction of premium on prepayment of debentures attributable to the eligible undertaking according to the ld. AO, which was reduced by the ld. AO while computing the deduction u/s.80IA of the Act while framing the assessment - HELD THAT:- CIT(A) had rightly observed that there is double disallowance of ₹ 2,44,86,356/- pursuant to the said action of the ld. AO in view of the fact that the ld. AO had granted deduction towards premium on prepayment of debentures of ₹ 4,32,67,811/- only while framing assessment and had further reduced this sum of ₹ 2,44,86,356/- from the claim of deduction u/s.80IA of the Act. We find that the ld. CIT(A) had directed the ld. AO to verify the record in this regard and rectify the mistake. We are not able to appreciate the grievance, if any, for the revenue in this regard 2019 (12) TMI 818 Validity of the re-assessment framed u/s 147 - as argued initiated on the same set of documents which were available during the original assessment proceedings u/s143(3) - HELD THAT:- AO during the original assessment proceeding has questioned about the different components of core shipping activities and the turnover vide notice dated 1st September, 2008 under section 142(1) Assessee furnished the details of the excess provisions written back vide letter dated 10th October 2008 along with the submission that it is engaged fully in the business of shipping and no other business activity is carried on by it. The income has been offered to tax under tonnage scheme except the income from dividend and interest on deposits which was suo-moto treated as income from other sources. The copy of the letter is enclosed on pages 143 to 148 of the paper book. The assessee further vide letter dated 27th October, 2008 has also furnished the details of turnover for core shipping including the excess provision written back of ₹ 23.94 crores, sundry receipts of core shipping of ₹ 1111 lacs and sundry balance written back of ₹ 47 lacs. The copy of the letter is enclosed on pages 150 to 161 of the paper book. AO in the original assessment proceedings under section 143(3) of the Act has conducted enquiries about the items as mentioned in the reasons recorded issued under section 148 of the Act. Therefore, the reopening under section 147 of the Act based on the same set of documents examined during the original proceedings is not sustainable. - Decided in favour of assessee. 2019 (12) TMI 817 Unexplained investments u/s 69 - HELD THAT:- Revenue had not been able to place on record any material which could dislodge or disprove the aforesaid claim of the assessee, and therein prove to the contrary that the aforesaid amounts were actually paid by the assessee. Rather, we are also persuaded to subscribe to the reasoning given by the assessee for the failure on its part to make the aforesaid payments. It is the claim of the assessee that as it was passing through a financial crisis, and also there were certain internal disputes amongst the directors of the assessee company, therefore, the purchase transaction of the aforesaid land at Village : Mundwa, Pune, which was proposed to be acquired for setting up a residential-cum-commercial project had came to a standstill. The aforesaid claim of the assessee is also supported by the fact that an amount of ₹ 2,00,00,000/- had thereafter been received back by the assessee company from the aforementioned persons i.e S/sh. Avinash Bhosale Amit Bhosale on 05.03.2013. In the backdrop of the aforesaid facts, we are of the considered view, that the CIT(A) after duly appreciating the facts of the case had by way of a very well reasoned order vacated the addition - Decided in favour of assessee. Bogus purchases - disallowance @12.5% of the aggregate value of impugned purchases - HELD THAT:- Neither the assessee had been able to substantiate the genuineness of the purchase transactions on the basis of any irrefutable documentary evidence, nor the revenue has carried out the required extensive verifications for arriving at a fair conclusion as regards the genuineness of the purchase transactions. Accordingly, in all fairness, we set aside the order of the CIT(A) in context of the issue under consideration and restore the matter to the file of the A.O for carrying out necessary verifications. Needless to say, the A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee, who shall remain at a liberty to substantiate the genuineness of the impugned purchase transactions on the basis of fresh documentary evidence. Decided in favour of assessee for statistical purposes. 2019 (12) TMI 816 Reopening of assessment u/s 147 - approval to the reopening of assessment in a mechanical manner - HELD THAT:- Since 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 Yes in Column No. 12 of the Format for Recording the Reasons for Initiating Proceedings u/s. 147 and For obtaining the Approval of the Addl./JCIT Commissioner of Income Tax and therefore, the legal issue in dispute is squarely covered by the aforesaid finding of the Tribunal, hence, respectfully following the aforesaid precedent in the case of Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi [ 2019 (8) TMI 1121 - ITAT DELHI] the reassessment is hereby quashed and accordingly the additional ground no. 2 is allowed. 2019 (12) TMI 815 Transfer pricing regulations applicability to operations carried out through operating qualifying ships - assessee is a company registered under the Tonnage Tax Scheme ('TTS') - HELD THAT:- Assessee is correct in contending that the AO/DRP failed to appreciate that the transfer pricing regulations do not apply to the assessee, to the extent of operations carried out through operating qualifying ships, since the assessee is a company registered under the Tonnage Tax Scheme ('TTS') provided under the Act. The facts in the year under consideration are not different from those in assessment years 2007-08 and 2011-12, where the very same issue has been decided by the Tribunal in favour of the assessee. (a) Section 115VA of the Income Tax Act, forming part of the TTS (for which, the assessee has made option) contained in Chapter XII-G of the Act, excludes the operation of sections 28 to 43C of the Act pertaining to the computation of total income under Chapter IV of the Act. (b) For computing taxable income under Chapter XII-G of the Act, related party transactions have no relevance, weight and length of user of qualifying ships, rather than the nature of party for which the user is, or ALP, or income, or expenses, being the formula prescribed for computation of income under Chapter XII-G. (c) Consideration of the TP provisions, enclosing within them, the arm s length principle, under Chapter X (sections 92 to 92F) of the Act are, a fortiori, not applicable to the TTS and ALP does not affect the computation and taxability of the tonnage income of the assessee. (d) Computation of income under the TTS is, thus, not impinged upon by the adjustment made by the TPO. (e) Income computed under the TTS is, by virtue of section 115VF, deemed to be the profits taxable as profits gains of business or profession. (f) The amount which represents reimbursement of Head Office Expenses by the assessee to its holding company and AE, has wrongly been added, by altering the expenditure, under Chapter X, despite the inapplicability of the Chapter and inspite of the fact that Chapter X contains only machinery provisions and no charging provisions, sans which, it is trite, no tax can be levied. (g) Non-applicability of Chapter X does not get altered by the factum of the assessee having either filed audit report in Form 3CEB, or undertaken the benchmarking process and concluding its international transactions to be at arm s length. (h) The issue stands decided by the Tribunal in favour of the assessee vide its orders in the assessee s case for assessment years 2007-08 and 2011-12. (i) The DRP has itself acceded to this legal claim of the assessee. Dividend Distribution Tax (DDT) under section 115-O on the dividends declared and paid by the assessee, to its foreign shareholder who is a tax resident of the Netherlands - excess of the rate provided under Article 10 read with the Most Favoured Nation clause under Article IV of the Protocol to the Double Taxation Avoidance Agreement between India and the Netherlands - Admission of additional grounds - HELD THAT:- With respect to the submission of the ld. DR that the procedure for making a claim, as prescribed in Article 10(3) of the DTAA, is not on record and hence, it requires factual investigation, we are of the view that the same does not, in any manner, relate to the assessee, or VODMC BV, or the project office, and hence, it cannot be regarded as a fact that needs to be examined for the purposes of admission and/or adjudication of the assessee's claim. In any case, as dwelt upon hereinabove, the assessee was prevented from raising the additional ground before the lower authorities, due to a reason beyond the control of the assessee, as considered above. This fact, by itself, is, in our opinion, sufficient to allow it to be raised at this stage. So, even if, arguendo, the objections of the Department were to be acceded to, the assessee s request for admission of the additional ground merits acceptance. We set aside this issue to the file of the Assessing Officer to examine the same in the light of the judgments of the Hon ble Supreme Court in the cases of Union of India vs. Tata Tea Co. Ltd. [ 2017 (9) TMI 1300 - SUPREME COURT] and Godrej Boyce Manufacturing Company Ltd. vs. DCIT [ 2017 (5) TMI 403 - SUPREME COURT] , after providing due opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the Assessing Officer. 2019 (12) TMI 814 Assessment u/s 153A - no approval in the eye of law, having been granted without application of mind - Faulty approach of the Additional CIT - HELD THAT:- Additional CIT, without any consideration on merit in respect of issues on which addition was made granted the Approval on the undertaking of the AO, in view of stated paucity of time with him for granting Approval.This approach of the Additional CIT, Central has rendered the Approval to be an eyewash and idle formality and such a mechanically granted Approval is no approval in the eyes of law. As rightly pointed out by the Ld. AR that in the facts of case of AAP Paper Marketing Limited [ 2017 (4) TMI 1371 - ITAT LUCKNOW] there may be some justification for the qualified approval in view of the fact that the limitation in that case was getting expired on the day when the draft assessment orders were put up before the Additional CIT, Central Circle, Kanpur for his approval. However, to the disadvantage of the revenue in the case on hands there can be no little justification for qualified approval as the proposal for approval was put up before the Additional CIT on 26.03.2015 and at the same time it was granted, without any application of mind on the pretext that limitation is going to get expired on 31.03.2015. Thus, in the case at hand despite availability of time the Additional CIT taking excuse of limitation has chosen to grant approval without application of his own mind but on the undertaking of the AO that while completing the assessment as per the draft assessment order, all the observations made in the appraisal report relating to examination/investigation as also the issues identified in the course of examination of seized material have carefully considered . In our view such a practice is required to be deprecated and we deprecate the same. - Decided in favour of assessee. 2019 (12) TMI 813 Disallowance u/s 10(10A)(ii) - assessee had revised his return of income and thereby offered less income than that was shown in the original return - nature of compensation received by the assessee from his employer - HELD THAT:- Employer introduced new policy for payment of pension / commuted pension to the employees. As per the said policy, the employer of the assessee had drawn annuity policy for its employees from Life Insurance Corporation of India. Out of the total fund value payable to the assessee, an amount was paid to the assessee on account of Commuted Pension and the balance funds was to be utilized for paying monthly pension after getting relieved from service. Though, the assessee was not immediately retired from the service and continued with the employment with his employer, yet, the basic intent and purpose of the aforesaid payment to the assessee was that of payment towards commuted pension to the employees. Though, generally the retrial benefits are paid on retirement from service, however, under certain circumstances, employment may be continued subject to payment of retrial benefits. The aforesaid payment to the assessee was nothing but the payment of retiral benefits towards Commuted Pension. We, therefore, are of the view that the lower authorities were not justified in disallowing the claim of the assessee u/s 10(10A)(ii). The action of the lower authorities on this account is set aside and the Assessing Officer is directed to allow the claim of the assessee made u/s 10(10A)(ii) of the Act. 2019 (12) TMI 812 Regional existence of place of PE - supervisory PE under Art. 5(2)(i) r.w. Art.5(1) of the DTAA - Income accrued in India - force of attraction rule - treaty between India and Germany DTAA - HELD THAT:- The location where the activities would be performed by the assessee in respect of the specific projects was dictated by the client s project site or as agreed with the clients and was undertaken outside India. Further, restriction on the activities which may be undertaken by project office is stipulated in the approval issued by the Government. Therefore, it cannot be said that the PE constituted in India by the assessee under Phase-II of the contracts with JKSPDC was involved in any way in the earning of income from technical services rendered by the assessee and other contracts in India. We find force in the contention of the assessee, that the PE constitute in India by the assessee under Phase-II of the contract with JKSPDC did not play any role or contributed in any manner to the execution of the other contracts or earning of FTS under other contracts and cannot thus be said to be involved with any other projects in India. Accordingly, FTS received by the assessee from rendering of technical services and other contracts cannot be said to be involved directly or indirectly in any manner to the PE constituted in India under the contract with JKSPDC- Phase-II and are formed for the purpose of deliberate avoidance of tax. We find merit in the argument of the Ld. AR that such income by way of FTS is to be subjected to tax @ 10% under article 12 of the treaty and cannot be subject to tax @ 20% as contemplated by the Assessing Officer. Regional existence of place of PE and the article 5(1) in the form of JKSPDC-BCS as well as there is existence of supervisory PE under article 5(2)(i) in the form of JKSPDC-BCS was not established by the Revenue from any documentary evidence on record. Similarly, the nature of business of the assessee remains unchanged and the assessee is engaged in the business of providing consultancy services to various projects in India. The assessee is an engineering consultancy services that offers wide range of planning, designing and consultancy services etc. in relation to complex infrastructure projects in India. The assessee rendered engineering consultancy services mainly in relation to power projects. PE in respect of JKSPDC-Baglihar Phase II Project has rightly been offered to tax at 20% by the assessee as it is the only project which has PE. The Force of Attraction rule will not be applicable in other projects as the same do not constitute either PE or does not come under the purview of the DTAA. The contradictions pointed out by the Revenue do not demonstrate that the other projects constitute PE. In fact, for applying force of attraction, there should be some common link to each of the contracts/projects such as the common expats, the common nature of the contract/projects, the commonality of the location, the common contracting parties etc. which are absent in the present case. Therefore, the applicability of rule of force of attraction does not apply in the present assessee s case. Thus, the treatment given by the assessee for offering tax @20% in one project and 10% in rest of the projects was rightly done. Taxability of reimbursement of expenses - HELD THAT:- these expenses were actually incurred by the assessee and there is no element of income involved in these expenses. This has been demonstrated by the assessee during the Assessment Proceedings as well as before the CIT(A). But both the Revenue authorities have not taken cognizance of the same. Besides that, revenue could not point out that there is any element of income involved in the said expenses as well as could not demonstrate that there was any mark up to these expenses. Therefore, Ground No. 2 of the assessee s appeal allowed Interest u/s 234B and 234C is not chargeable where tax is deductible at source. The reliance placed on GE Packaged Power Inc. [ 2015 (1) TMI 1168 - DELHI HIGH COURT] is apt. 2019 (12) TMI 811 Bogus LTCG/losses derived from transfer of shares - Unexplained cash credits u/s 68 - Diversified views - HELD THAT:- Addition on involving an assessee s profits derived from sale of shares can be declined only in absence of the supportive evidence on record whereas hon ble Bombay high court has gone by circumstantial evidence. Rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is Long Term Capital Gain from sale of shares and hence exempt from income tax. Hon ble high court s have adopted varying opinions qua correctness of identical long term capital gains. In other words, hon ble Calcutta high court is of the view that such an addition on involving an assessee s profits derived from sale of shares can be declined only in absence of the supportive evidence on record whereas hon ble Bombay high court has gone by circumstantial evidence. We quote hon ble apex court s judgment in CIT vs. Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] in these peculiar facts and adopt the view of hon ble Calcutta high court in taxpayer s favour. We further make it clear that hon ble jurisdictional high court has not decided the issue till date. The impugned additions are deleted therefore. - Decided in favour of assessee. Customs 2019 (12) TMI 801 Benefit of MEIS Scheme - case of the Petitioner is that MEIS is an incentive which is provided to exporters in order to compensate them for higher freight charges and labour costs - petition was unable to upload shipping bills for the exports - HELD THAT:- Insofar as the three shipping bills which according to the Petitioner ought to have been re-transmitted are concerned, the proof of submission of the same contemporaneously would be furnished to the Respondent No.3. After verification of the same, if the Respondent No.3 has any objections in respect of the three shipping bills, the same shall be communicated to the Petitioner and the issues in respect of the three shipping bills shall also be resolved. The 40 shipping bills which have now been re-transmitted shall now be processed by Respondent No.2 i.e. DGFT in order to permit the Petitioner to avail of the benefits under the MEIS. If the three shipping bills are retransmitted after satisfying the Customs Authorities on the ICEGATE platform, then the said shipping bills would also be processed for extending of the MEIS benefit in respect thereof. Petition allowed. 2019 (12) TMI 799 Seizure of consignment - import from Sri Lanka under the Incentive Scheme - grievance is that the consignment has not been released for the last two months on the alleged ground of verification of certificate of place of region while illegally demanding 100% bank guarantee of the proposed custom duty - HELD THAT:- At the time of resume hearing today, learned counsel for the respondents states that the goods have been released without seeking any bank guarantee and therefore, seeks exemption from filing the affidavit in compliance of the previous orders. Petition dismissed as infructuous. 2019 (12) TMI 798 Conviction of sentence - fist time offender - awarding of sentence / punishment lower than as statutory punishment prescribed under the provisions of the Customs Act - Section 135(3)(1) of Customs Act - HELD THAT:- The provision relied on by the learned counsel for the petitioner is very clear that the special reason excludes the first time offender as per Section 135(3)(i) of the Customs Act. Therefore, the reliance placed by the Magistrate for passing special sentence less than statutory minimum punishment per se appears to be in violation of the provisions of the Customs Act and therefore, the same is liable to be interfered with. The sentence passed by the learned Judicial Magistrate is therefore, contrary to the specific provision of the Customs Act and therefore, it calls for interference from this Court. This Court is of the view that the matter is to be remanded back to the learned Judicial Magistrate for fresh consideration and passing orders in terms of Section 135 of the Customs Act, 1962 - appeal allowed by way of remand. 2019 (12) TMI 796 Classification of imported goods - cut solar cells - during some cells are damanged - doubt about import of scrap and waste - benefit of N/N. 24/2005-Cus dt. 01/03/2005, 12/2012-CE dt. 17/03/2012 and 21/2012-Cus dt. 17/03/2012 - Absolute confiscation - penalty - HELD THAT:- The order of re-export of the goods on payment of redemption fine within 30 days and if not complied with, the goods will be disposed of as per the statutory provisions, is in excess of jurisdiction conferred by the Statute, because the provisions of the Customs Act do not provide for re-export of the imported goods on payment of redemption fine and therefore the adjudication order was beyond the statutory provisions of the Customs rules. This proposition was considered by the Division Bench of the Tribunal in the case of HBL POWER SYSTEMS LTD. VERSUS CC, VISAKHAPATNAM [ 2018 (7) TMI 793 - CESTAT HYDERABAD] wherein the Tribunal in identical circumstances has analysed the scope of Section 125 of the Customs Act where it was held that The scope of Section 125 of the Act is limited by the words in which it is framed and it is not open to the adjudicating authority or the Tribunal (who are creatures of the statute) to stretch, modify or restrict the scope of this Section; they are bound by it. Classification of goods - HELD THAT:- It is submitted that, there is no misdeclaration on his part because the right classification for the impugned goods is CTH 85414011 - both the authorities have mis-read and mis-construed the reports submitted by the IISc., CPCB and KSPCB. In fact out of the 3 reports, the crucial and relevant is the report submitted by the KSPCB because their officers visited the spot and after physical verification, they have observed in their report dt. 31/10/2017 that the cut pieces of solar cells of silicon wafers may be used for various solar applications like assembling of solar lantern, solar light etc. As per the settled law, the burden of classification is on the Department and in the present case, the Department has not made any effort to prove the same by any documents except the proceeding to classify the impugned goods as waste and scrap solely considering breakage of some of the imported goods and without considering the nature of usage of the said goods - even in the report of CPCB, the Board has clarified that the scrap of solar cells (broken/small pieces of silicon wafers) does not appear in any of the Schedule of the Hazardous and other Wastes (Management Transboundary Movement) Rules, 2016. The imported solar cells are precise in nature and therefore there is always likelihood of some damage during the process of transit and the present case, only 70 kgs. has been damaged out of 13599.5 kgs. and even the damaged goods can also be used for various solar applications as per the technical write up produced by the appellant on record. The Customs authorities to release the consignments of the appellant within a period of two weeks - Appeal allowed - decided in favor of appellant. 2019 (12) TMI 794 Jurisdiction - SEZ unit / area - power of Custom Officer of search and seizure - Smuggling - import of gold for conversion into gold jewellery and export of the same - Revenue entertained a view that the said goods were attempted to be illegally smuggled out of the zone by the said employee and accordingly undertook further investigation - whether the Customs officer can search and seize the goods from a person, who is located in the SEZ area as the legal authorized unit indulging in legal import of the goods? HELD THAT:- The Tribunal in catina of judgments has held that Customs officers has no jurisdiction to deal with the matter in respect of units located in SEZ area and has no powers to issue the show cause notice. This was held by the Hon ble Gujarat High Court in the case of BHARTI J. GANDHI VERSUS UNION OF INDIA [ 2009 (12) TMI 439 - GUJARAT HIGH COURT] - To the same effect the decision of this Bench in the case of M/S MORGAN TECTRONICS LTD. SHRI P.V. KHULLAR, DIRECTOR VERSUS COMMISSIONER OF CUSTOMS NOIDA CUSTOMS COMMISSIONERATE, NOIDA [ 2018 (10) TMI 1214 - CESTAT ALLAHABAD] wherein after taking note of the Tribunal s earlier decision in the case of the same assessee s it was held that Customs Authorities have no jurisdiction to deal with gold imported by unit located in SEZ. Appeal allowed - decided in favor of appellant. 2019 (12) TMI 793 Refund of Excess Customs Duty paid - fertilizers imported on which they have paid excess Customs duty taking the wrong value for the purpose of calculation - finalization of provisional assessment - rejection of refund on the ground that the assessments which were done by the adjudicating authority were not challenged by the assessee - principles of natural justice - HELD THAT:- The issue has now been settled by the larger Bench of the Hon ble Apex Court in the case of ITC Ltd. [ 2019 (9) TMI 802 - SUPREME COURT ], where it was held that The appellant was not entitled to the refund without having first challenged the assessment order itself and therefore the impugned order denying such refund is correct. Principles of natural justice - appellant also claims that they were not given an opportunity of being heard before finalizing the assessment - HELD THAT:- Nevertheless, the fact remains that such assessment has not been challenged at all by the appellant. This appeal is not with respect to finalization of provisional assessment but with respect to refund - the rejection of the refund by the impugned orders of the first appellate authority are correct and call for no interference. Appeal dismissed - decided against appellant. 2019 (12) TMI 792 Imposition of penalty u/s 112, 114 117 of Customs Act, 1962 - misdeclaration of export goods - export of metal scrap to fulfill the export obligation by mis-declaring the same as gold jewellery while importing brand new gold jewellery as raw material by mis-declaring the same as old jewellery for repair, remaking and polishing - misusing the facility provided under SEZ scheme. Penalty u/s 112 of CA - improper importation of goods - HELD THAT:- The penalty under Section 112 of the Customs Act, 1962 is provided for improper importation of the goods. The finding of the Original Adjudicating Authority in sub para no.ee on page no.349 of Order-in-Original is reproduced in the forgoing paragraphs. The said finding nowhere indicates that the appellant had anything to do with any imports - Therefore, imposition of penalty on the appellant under Section 112 of Customs Act, 1962 is without application of mind by the Original Adjudicating Authority, therefore, the same is set aside. Penalty u/s 114 of CA - omission or commission in respect of export goods - HELD THAT:- The proceedings do not establish that the appellant had any knowledge that the documents were having mis-declaration with reference to the actual contents of the consignment to be exported. The reading of the said provisions of act indicate that the person liable to penalty must have knowledge or reason to believe that the goods in which he is dealing are liable to confiscation. Even if it is accepted for the sake of argument that appellant has authorised Shri Ajit Singh to Sign documents on their behalf, still revenue has not established that the appellant had knowledge that the goods which were being presented for export were liable for confiscation and they were different than the goods described in Shipping Bills - Revenue did not find anything irregular, had the goods described were exported. Therefore, appellant was not liable for imposition of penalty under Section 114 of the Customs Act, 1962. Penalty u/s 117 of CA - omission or commission for which no penalty is provided for - HELD THAT:- The findings as reproduced in the earlier paragraph does not indicate as to which omission or commission on behalf of the appellant has rendered appellant liable for imposition of penalty under Section 117 of Customs Act, 1962 - In the absence of any such finding by the Original Adjudicating Authority the penalty imposed on the appellant under Section 117 of the Customs Act, 1962 is liable to be set aside. All penalties set aside - appeal allowed - decided in favor of appellant. 2019 (12) TMI 791 Revocation of CHA License - forfeiture of security deposit - time limit for submission of enquiry report - it is alleged that the entire proceeding has been completed beyond the prescribed time limit under the CBLR - violation of provisions of Regulation 11(d), 11(e), 11(m) and 17(9) of the CBLR - penalty - HELD THAT:- From the order of the Commissioner, it is found that the submissions made by the appellant were not duly considered and the penalty of revocation was imposed without considering any alternate penalty. By revocation of licence of the appellant, there is denial of livelihood of appellant along with their employees - also due to inherent contradiction among the statements recorded by the various persons, the revocation of CHA licence, which is harshest should not have been imposed by the impugned order as it would be disproportionate to the offence committed by the appellant even if it is held so. The Appellant has not been avoiding the investigation, but cooperated and also made a payment of ₹ 65.00 Lakhs to Customs so as to make good the loss to the Revenue. This in itself proves the bona fide of the appellant to sincerely attempt for the loss of revenue to be compensated. The charge against appellant is only regarding violation of Regulation 18(d) and 17(a) of CBLR. Regulation 11(d) and CBLR 13 is not established conclusively, which says Customs Broker shall advice his client to comply with provision of the act and in case of noncompliance bring the matter to the notice of Deputy Commissioner or the Assistant Commissioner of Customs as the case may be - Since the investigation was not carried out in respect of all consignments of import of old and used garments, for which weighment slips were made available it cannot be established beyond doubt that offence has been committed for all as held in the impugned order. Penalty - HELD THAT:- The penalty that has been imposed against the appellant in the impugned order is disproportionate to the penalty imposed. The appellant has suffered from the date of suspension of his licence till now which in our opinion is itself sufficient considering the gravity of offence committed by the appellant - the impugned order is not sustainable and liable to be set aside - appeal allowed - decided in favor of appellant. 2019 (12) TMI 789 Provisional assessment - ship demurrage charges - assessment of amount of clean energy cess - HELD THAT:- It is now an well established legal principle that a assessment which is provisional is provisional for all purposes and at the time of finalization of the assessment, all factors which are necessary for finalization of the assessment must be reckoned. For instance, if the assessment is left open for questions of valuation, and subsequently it is found that the classification also requires a change or some other licencing requirement has to be examined, all these factors must be examined while finalizing the provisional assessment. There cannot be a provisional assessment which is provisional for one purpose and not provisional for other purposes. Imposition of clean energy cess - The second contention of the Revenue is that the importer, having not contested the Bills of Entry and having themselves assessed their Bills of Entry provisionally including therein the Clean Energy Cess, cannot challenge the imposition of the Clean Energy Cess before the first appellate authority - HELD THAT:- The first appellate authority has correctly allowed the appeals of the importer by the importer and has ordered re-assessment of the six Bills of Entry after excluding Clean Energy Cess on the ground that there is no charge of Clean Energy Cess on goods falling under Customs Tariff Heading 2704. Appeal dismissed - decided against Revenue. 2019 (12) TMI 785 Principles of Natural Justice - Valuation of imported goods - MDF with Veneer Face - rejection of declared value - Rule 10A of the Customs Valuation Rules, 1988 - case of appellant is that the order has been passed in gross violation of natural justice as they were not heard before the order was passed in the matter - HELD THAT:- Undisputedly in the present cases the charges of mis-declaration of value and quantity in the present cases has been made on the basis of e-mail correspondences between the foreign supplier and another importer M/s SGS Corporation. On the basis of the e-mail correspondences and statements recorded during the course of investigation charges of under valuation and misdeclaration of quantity made against the present appellants. Such cases were the evidences that are being relied upon need to be established in the adjudication proceedings in terms of Section 138B and 138C of the Customs Act, 1962. In such case where the evidences relied upon by the revenue are not direct but have been recovered during the investigations against some party, in present case M/s SGS Sales Corporation, the relevance of personal hearing in the adjudication proceedings increase many fold. Since the order has been passed without hearing the appellants in the facts and circumstances of these cases we are constrained to observe that orders have been passed in violation of principles of natural justice. Appeals are allowed by way of remand to the adjudicating authority to afford an opportunity of personal hearing to the appellants. Corporate Laws 2019 (12) TMI 795 Rejection of prayer for Director's remuneration of the respondents - Money Laundering - siphoning of funds - illegal allotment of shares - HELD THAT:- It is true that if we read relief (iv) Directors remuneration be paid to petitioners until outcome of the petition with this order the remaining prayers made in the application have already been considered earlier and were found in favour of the petitioners. Therefore, they are rejected. Then it seems that the Company Law Board has earlier rejected the prayer for directors remuneration to be paid by the Company. However, the appellants have not placed on record any such order to show that earlier such prayer was considered and rejected. It seems that inadvertently Company Law Board while deciding the application with other reliefs have made this observation - also the appellants in the reply of present application before NCLT have not raised this ground. It means that they are well aware that earlier Company Law Board or NCLT has not considered and rejected the prayer of respondents for directors remuneration. The reasoning of NCLT is justified - appeal dismissed. PMLA 2019 (12) TMI 810 Restoration of application - withdrawal of vakalatnama by earlier lawyer - eviction notice - no sale of the properties which have been attached by the ED has taken place - HELD THAT:- The order of the Tribunal dated 17.7.2017 clearly mentions that the advocate appearing on behalf of the appellants had withdrawn his vakalatnama and it is recorded that he had already intimated to his client who shall make necessary arrangement to represent his case - Thereafter the case was fixed for hearing at least on four occasions almost covering a span of one year, but no one ever appeared. However soon after the case was dismissed for non prosecution on 07.09.2018, it is seen that the appellants filed the Restoration applications on 24.09.2018, within 17 days of the dismissed order. This does point out the intention of the appellants of deliberately not appearing on the previous occasions, so that the matter could get prolonged. The plea of the appellant Sh. Anosh Ekka s counsel that the appellant was in jail does not hold much ground as there are at least 9-10 other appellants as listed above who also did not appear and most of them are related to Sh. Anosh Ekka. Even today Sh. Anosh Ekka is in jail as stated by the counsel for the appellant but nevertheless he has been able to appoint a new lawyer - The conduct of the appellant as brought out by the respondent and which was not controverted by any documents or evidence especially the fact of selling off the attached properties under PMLA only points towards the dis-regard of law by the appellants. Justice is qua both the parties. There are no reason to allow the ROA applications - ROA application dismissed. 2019 (12) TMI 809 Grant of interim stay on provisional attachment order - de-freezing of bank accounts of appellant - applicant has confined his submission an order for release of amount deposited in Madhya Pradesh Gramin Bank subsequent to the passing of provisional attachment order - HELD THAT:- It is the uncontroverted fact that the appellant/applicant is maintaining the account bearing no. 2004101130000261 with Madhya Pradesh Gramin Bank, Shahpura Branch, Bhopal. It is the contention of the appellant/applicant that the Madhya Pradesh Govt. has transferred certain amount which is required for the purpose of payment to be made to the vendors and salary of the staff etc. and if the amount so deposited by the Madhya Pradesh Govt. is not released it is likely that the entire project shall be terminated. During the course of hearing, it is clearly submitted by the ld. Counsel for the respondent that the account in question has not been attached. The amount that has been attached to the tune of ₹ 5,53,401/- in six different banks accounts. The amount which is asked to be released by the appellant has not been attached or freezed under the PAO. This Tribunal has a limited jurisdiction of deciding legality and propriety of the impugned order, since the amount sought to be de-freezed are beyond the scope of the Provisional Attachment Order and the order of confirmation of the said PAO and is not with respect to the amount sought to be released so the question of passing an order for de-freezing the amount transferred by the Madhya Pradesh Govt. and being not part of PAO Impugned Order is beyond the scope of present appeal, hence can t be considered. The prayer in Ad-Interim relief application sought by the appellant/applicant is also rejected - Application disposed off. 2019 (12) TMI 802 Money Laundering - proceeds of crime - provisional attachment of immovable properties - Section 42 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- There is considerable merit in the appellant s contention that it is not necessary that proceeds of crime in the hands of a person can be attached, notwithstanding that the person is not accused of any scheduled crime or the offence of money laundering. Plainly, if an asset which is derived by any person from a criminal activity is entrusted to another person, who is neither complicit in the criminal activity and is oblivious of the means by which the asset was acquired; he would neither be charged of committing a scheduled offence nor the offence of money laundering. Notwithstanding the above, the asset in his possession would be liable to be attached and confiscated in terms of the provisions of PMLA. The allegation against the respondent s husband was that he had amassed assets disproportionate to his sources of income. It was found that as on 10.10.2007 (end of the check period), the respondent s husband (Major Gen. Anand Kumar Kapoor) was in possession of assets to the extent of ₹5,51,92,598/-. These included both movable and immovable assets, either in his own name or in the name of the respondent. Three immovable properties of the respondent which are sought to be attached by the appellant were part of the immovable assets taken into account while calculating the assets held by the respondent s husband as on 10.10.2007. The Trial Court had found that a total income of ₹4,10,35,864/- had been earned during the check period and an expenditure of ₹1,26,52,600/- was incurred during the said period - After accounting for the same, as well as the assets available at the beginning of the check period, the Trial Court concluded that the assets to the extent of ₹2,22,04,290/- were disproportionate to the known sources of the income of respondent s husband. Thus, clearly the remaining assets were acquired from legitimate and known sources of income and therefore, cannot be considered as proceeds of crime. Assets, to the extent of ₹2,22,04,290/-, have been directed to be confiscated and thus, there is no scope for the present proceedings on the basis that any of the remaining assets constitute proceeds of crime. It is relevant to note that no particular assets held by respondent or her husband were identified as an asset derived from any criminal activity. The nature of the charge did not warrant any such inquiry and the extent of disproportionate assets had been determined on the basis of the value of assets at the end of the check period less the value that could be accounted from the known sources of income - the contention that three immovable assets held by the respondent are proceeds of crime, is fundamentally flawed. Appeal dismissed. Service Tax 2019 (12) TMI 808 Works Contract Services - composite contract - Body Corporate - services provided to Government Educational Institutions, Government Hospitals and other Government works and to Charitable Trust - benefit of N/N. 30/2012-ST dated 20.06.2012 at Sr. No. 9 - Construction of EWS Flats upto 31.03.2015 and the other services whether they have been provided to body corporate or not? HELD THAT:- For EWS Flats constructed by the appellant, the appellant is claiming the benefit under Sr. No. 12 (a) of the said notification. As per the said provision, if the said services provided to Government or local authority by way of construction meant predominantly for use other than for commerce, industry, or any other business or profession - Admittedly, these EWS Flats have been constructed by the appellant for Improvement Trust, Amritsar. The said flats were distributed by the Government among jhuggi jhopri residents at much below than the cost of construction. The said flats were not constructed for any commercial gain, therefore, we hold that the appellant is entitled for the benefit of Notification No. 25/2012-ST dated 20.06.2012 at Sr. No. 12 (a) and (c). Therefore, on the amount for construction of EWS Flats, the appellant is not entitled to pay service tax. In view of this, for the period prior to 31.03.2015, the appellant have not to pay service tax on the construction of EWS Flats. Thus, for the period prior to 01.04.2015, the appellant is not liable to pay service tax at all on construction of EWS Flats, but thereafter, the appellant is liable to pay only 50% of the service tax on them in terms of Notification No. 30/2012-ST dated 20.06.2012 at Sr. No. 9. Cervices rendered for Construction of bridges - 12/2012-ST dated 20.06.2012 at Sr. No. 13 (a) - HELD THAT:- The construction of Multi-level car parking for Government Medical College and Hospital and contract was entered by PWD, B R [Public Works Department (Building and Roads)], Amritsar; Repair and renovation work at Medical College, Amritsar to a contract with PWD (B R), Amritsar; Meritorious School at Ferozpur to a contract with PWD (B R), Ferozpur; Construction of foot-over bridge at Amritsar to a contract with PWD (B R), Amritsar.The Sr. No. 9 in the Notification No. 30/2012-ST dated 20.06.2012 is available to the appellant if they provided services to a business entity registered at body corporate - The PWD (B R) is into the business of construction of building and roads etc. and are also body corporate in terms of section 3 of Punjab Roads and Bridges Development Board Act, 1998. Further, the CPWD is engaged in business / profession of design , construction and maintenance of central government non-residential building other than Railways, Airports; construction and maintenance of residential accommodation meant for central government employee providing consultancy services in planning , designing and construction of Civil Engineer products, as and when required by public undertaking and other autonomous bodies. CPWD like PWD are also body corporate. The name of Punjab State Small Industries Corporation Ltd. was converted into Punjab Small Industries Export Corporation Ltd. w.e.f. 21.10.1982 which is engaged in business / profession to acquire and hold movable and immovable property. It also gave loan in cash or in kind or in form of building, developed plot of land in the small industry state or machinery and equipment on lease or on hire purchase basis to borrower for the purpose of small, cottage and other industries - the appellant has provided the services to a business entity registered at body corporate and are required to pay 50% service tax in terms of Sr. No. 9 of the Notification No. 30/2012-ST dated 20.06.2012. For construction of EWS Flats, the appellant is entitled for benefit of exemption Notification No. 12/2012-ST dated 20.06.2012 at Sr. No. 12(a) upto 31.03.2015 - For services rendered for Construction of bridges, the appellant is entitled for the benefit of exemption Notification No. 12/2012-ST dated 20.06.2012 at Sr. No. 13 (a) - For other services and flats constructed after 01.04.2015, the appellant is entitled for the benefit of Notification No. 30/2012-ST dated 20.06.2012 at Sr. No. 9 i.e. the appellant is liable to pay 50% of the service tax. The appellant is directed to quantify the demand in terms of the above order and the same is to be deposited within 30 days of the receipt of this order. The appellant is liable to pay interest for the intervening period. The appellant is liable to be penalized as per the impugned order, the quantification is to be done accordingly - appeal allowed by way of remand. 2019 (12) TMI 797 Business Auxiliary Service - collection of toll fee in respect of National Highway Authority of India - HELD THAT:- In the instant case is squarely covered by the decision of this Tribunal in the case of Larson Toubro Ltd. [ 2018 (11) TMI 924 - CESTAT AHMEDABAD ] where it was held that Every user is a customer of AMTRL and the appellants are providing services to the customers (the users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS. Since it is found that the nature of services provided is practically similar to the nature of services involved in the case of Larson Toubro Ltd. - appeal dismissed. Central Excise 2019 (12) TMI 807 CENVAT Credit - As per Revenue, since the repair of transformer does not amount to manufacture, the appellants were not entitled to avail the credit of duty paid on the transformer oil used for repair purposes - HELD THAT:- Admittedly the present order stands passed in the second round of litigation. When earlier the matter has travelled up to Tribunal and Tribunal in ACCURATE TRANSFORMERS LTD. VERSUS COMMISSIONER OF C. EX., GHAZIABAD [ 2015 (12) TMI 66 - CESTAT NEW DELHI] had held that inasmuch as there was no proposal in the show cause notice for confirming and appropriating the already reversed cenvat credit, the same cannot be confirmed. As such, we fully agree with the Commissioner (Appeals) that confirmation of the same in remand proceedings was not appropriate. Similarly as regards the second issue, it is noted that whatever duty was payable by the appellant was available as credit to their sister unit in which case extended period of limitation cannot be invoked as rightly held by Commissioner (Appeals) - Similarly the issue of availment of credit on the basis of the invoices which was not signed by the Authorized Signatory was already held by the Tribunal as rectifiable defect and not resulting in denial of cenvat credit to the assessee. Appeal dismissed - decided against Revenue. 2019 (12) TMI 805 100% EOU - Refund claim - destroying goods outside the factory premises without permission - Expired drugs / medicines - it was held by High Court that the substantial question of law is answered in favour of the appellant that the CESTAT committed fundamental error in construing the Exemption Notification as directory by condoning the lapse on the part of the assessee in destroying the manufactured goods outside the unit without permission of the concerned Authority. HELD THAT:- The SLP need not be entertained - SLP dismissed. 2019 (12) TMI 803 Recovery of erroneously granted refund - unjust enrichment - finalization of provisional assessment - HELD THAT:- From the reading of provisions of Section 11A(1) of the Act, which provides for recovery of any duty of excise which has not been levied or paid or has been short levied or short paid or erroneously refunded. The recovery of such amount of excise duty can be made under Section 11A(1) irrespective of whether such non-levy or non payment or short levy or short payment or erroneously refund was on the basis of any approval, acceptance or assessment relating to rate of duty or on valuation of excisable goods under any other provisions of this Act or Rules made thereunder. As in the present case, provisional assessment was finalised on 24.07.2015, the assessing authority recorded a finding that CA certificate dated 15.06.2015 certifies that no part of duty is recovered from the dealers/ distributors involved in the discount passed on to the dealers/ distributors, which indicates that assessee had not passed on the incidence of duty paid in proportion to the discount given to dealers/ distributors and, therefore, issue of unjust enrichment is a remote possibility and further, the order observed that duty to the tune of ₹ 17,89,42,303/- was passed on to the customers and duty deposited to the tune of ₹ 1,03,75,633/- was in excess - Further, an application being made by petitioner was adjudicated by Assistant Commissioner on 05.11.2015 wherein it was held that it was not a case of unjust enrichment and petitioner was entitled for refund. This order was also not challenged by revenue and the same attained finality. Initiation of proceedings under Section 11A for recovery of excise duty - change of opinion - adjudication had been made by department making final provisional assessment and, thereafter, no appeal being filed challenging the said adjudication which having attained finality - HELD THAT:- As it is not in dispute that after provisional assessment order, the adjudicating authority passed an order for refund under Section 11B of the Act. Both the orders which were appealable and revisable under Section 35 and 35E were never taken to the higher forum by revenue and they attained finality. Section 11B assumes great significance, as any order of refund of excise duty and interest is made only after the adjudication as envisaged under scheme of Section 11B. In the present case, petitioner-company had made an application for refund which was adjudicated on 05.11.2015 and it was directed to refund excise duty to tune of ₹ 1,02,75,633/- which was in excess. This order was never challenged by revenue in appeal and it attained finality - once the order of adjudication has been validly passed under Section 11B and a refund has been made on 05.11.2015. Invocation of Section 11A of CEA - HELD THAT:- Section 35E and 11A operate in different fields and are invoked for different purposes, we are merely concerned in this case with the interplay between Sections 11A and 35E. We are also concerned with what happened in the form of an adjudication under Section 11B. What happens in a case wherein adjudication takes place under Section 11B and authorities do not take recourse available to them, whether after having allowed adjudication under Section 11B to attain finality, was there any remedy available to department at all under Section 11A to proceed - Thus, the department, once the adjudication has taken place under Section 11B, cannot proceed to recover on the basis of erroneous refund under Section 11A so as to enable the refund order to be revoked, as the remedy lied under Section 35E for applying to the Appellate Tribunal for determination and not invoking Section 11A. The issuance of show-cause notice dated 17.08.2017 and, thereafter, order dated 30.11.2017 passed by respondent authority for repayment of refund pursuant to orders under Section 11B are unsustainable - Petition allowed. 2019 (12) TMI 790 SSI Exemption - clubbing of clearances - job-work - appellant took a categorical stand that they were getting the goods manufactured on job work basis from M/s Dimond Steel and produced the relevant documents - HELD THAT:- The entire purpose of adjudication is to come to the finding between the allegations and proposals made by the revenue and the defence, pleas and contention raised by the assessee. If the entire documents are required to be produced at the time of investigation itself and are blocked from producing at the time of adjudication, the entire purpose of adjudication gets defeated. The assessee is within his right to produce such defence documents, which he considers relevant for countering the allegations of the revenue. It is only after the allegations are revealed in the show cause notice, an assessee would come to know about the same and would submit his defence. As such, to observe that such defence should have been submitted before the investigating authorities, when the show cause notice was not even issued, is not only against the settled principals of law but are perverse observation also. Matter remanded to adjudication authority for fresh adjudication after giving a proper opportunity to the appellants to put forth their case - appeal allowed by way of remand. 2019 (12) TMI 788 Maintainability of proceedings - Area Based Exemption - Benefit of N/N. 32/99 and N/N. 8/04-CE dated 21.01.2004 - branded chewing tobacco in the brand name of Tulsi prior to 22.08.2001 - extension of existing unit - dispute in the instant case is related to the Shed No.17 located in the same Bamunimaidan Industrial Estate and Appellant s claim that this shed is an extension of its existing unit located at Shed No.6 7 in the same industrial Estate. HELD THAT:- CBEC vide Circular No.960/03/2012-CX-3 dated 17.02.2012 has clarified that new plot if added should not affect the benefit. Further vide Circular No.939/29/2010-CX dated 22.12.2010 clarified that addition of new brands would also not mean denying the benefit. Even, if the Circular is modified subsequently against the interest of the assessee, the modification applies only prospectively The proceedings are not maintainable as per Section 72(6) of the Finance Act, 2011. Moreover, since IAC has examined and re-done the whole exercise again as mandated by Section 72 of the Finance Act, 2011 and did not raise any objection on eligibility, the eligibility questioned in SCN had become redundant. Appeal allowed - decided in favor of appellant. 2019 (12) TMI 787 CENVAT credit - input - grinding wheel used for the finishing of their final products - HELD THAT:- The issue decided in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS BOTLIBOI CO. LTD. [ 2009 (7) TMI 727 - GUJARAT HIGH COURT] where it was held that the grinding wheels are definitely parts of the grinding machine used by the respondent assessee and they have to be considered as inputs under Rule-57A of the Central Excise Rules. By respectfully following the aforesaid decision of the Hon ble High Court, the impugned Order is set aside - credit allowed - appeal allowed - decided in favor of appellant. 2019 (12) TMI 786 Method of Valuation - section 4 or section 4A of Central Excise Act - Set Top Boxes for television sets under the brand name of TATA SKY - whether the duty of Central Excise discharged on MRP of ₹ 1499/- could be accepted for discharge of duty under section 4A of the Excise Act? HELD THAT:- In exercise of the powers conferred by sub-section (1) and (2) of section 4A of the Excise Act, the Central Government issued a Notification dated 1 March, 2006 which was subsequently amended by Notification dated 24 January, 2008 by which Set Top Boxes for television sets were included as at Serial. No. 89B. It is not in dispute that the Respondent was paying Central Excise duty on the various models of Boxes manufactured and cleared on the basis of MRP printed on the boxes in terms of section 4A of the Excise Act after availing abatement as applicable from time to time with effect from 25 January, 2008. Prior to this date, the Respondent was paying Central Excise duty of the boxes on the transaction value under section 4 of the Excise Act - The Commissioner found that the Department could not substantiate that the goods in question were sold to ultimate consumers at a price that was higher than the printed MRP. While arriving at this finding, the Commissioner observed that none of the three grounds contemplated under section 4A of the Excise Act on account of which the Department could ascertain the retail price existed. In fact the Commissioner also examined two invoices which clearly indicated that the boxes were sold at ₹ 1,499/- by M/s TATA SKY Ltd. No evidence was produced by the Department to establish that the Boxes were sold to ultimate customers at a price higher than the MRP. When the conditions set out in sub-section (4) of section 4A of the Act for ascertaining the retail sale price of the goods were not satisfied, the Department cannot be permitted to ascertain the sale price of the goods. The MRP indicated in the Boxes would alone form the basis for determining the levy of Central Excise duty. Appeal dismissed - decided against appellant. 2019 (12) TMI 784 CENVAT Credit - recovery of irregular credit belonging to another unit of the appellant alongwith interest and penalty - period 2013-14 and 2014-15 - whether the Appellant is required to again reverse the full amount of Cenvat credit on account of ineligibility of Cenvat credit availed by the Appellant during the period in which the reversal of Cenvat credit as per the procedure laid down Rule 6(3) (b) of the Cenvat Credit Rules, 2004 for proportionate reversal of Cenvat credit during the said period has already been done by the Appellant? HELD THAT:- The Appellant has produced a CA certificate showing the reversals made for the FY 2014-15 on account of following the procedure as per Rule 6(3) of the Cenvat Credit Rules, 2004. Also a verification report as submitted by the Range office of the Appellant is placed on record which shows that the Appellant has actually reversed Cenvat credit following the said process for FY 2014-15 - From the above noted facts, it can be found that the Appellant cannot be asked to pay more than what it has actually availed. Appellant cannot be asked to reverse more than the actual Cenvat credit availed by the Appellant and based on the CA certificate and Range report there is no doubt as to the fact that the Appellant has actually followed the process of proportionate reversal under Rule 6(3) of the Cenvat Credit Rules, 2004 - demand set aside. Penalty U/s 11A - HELD THAT:- The disputed amount had been paid before the issuance of the show cause notice, and the entire amount was paid alongwith interest. Therefore, the payment of duty in the instant case should have been treated as payment of central excise duty under Section 11A (2B) of the Act and the show cause notice should not have been issued. Penalty u/s 11AC - HELD THAT:- The Revenue has not been able to prove beyond reasonable doubt the presence of fraud, collusion, willful misstatement or suppression of facts on the part of the appellant. Therefore, imposition of penalty under Section 11AC of the Act is unwarranted. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (12) TMI 804 Re-assessment - Authorization granted by respondent no.2 under Section 29(7) of the Value Added Tax Act, 2008 - business of construction of road and bridges - Petitioner had opted for Composition Scheme as announced by State Government for Civil Contractors for assessment year 2007-08, 2008-09 and 2009-10 - HELD THAT:- The action of respondent no.2 proceeding to grant authorisation for re-assessment for including capital goods for value of work contract purchased from outside the State along with raw material to the quantum of turnover of Compounding Scheme for the year under consideration is highly unjustified, as the assessee had already been taxed @ 2% for work done as the goods used in execution of work contract, was to the extent of 5% of the total contract money - Apart from that total contract money under consideration for assessment year 2010-11 of the composition scheme was only ₹ 1,80,71,92,729/- and petitioner-assessee having imported goods valuing ₹ 3,36,13,446/- which is less than 5% of total contract money, therefore, the assessing authority had rightly taxed @ 2%, thus the order of authorization for re-assessment under Section 29(7) of the VAT Act cannot be sustained on the premises that plant and machinery has not been included. Once the matter of the assessee for previous year was accepted by the Tribunal as far as the capital goods are concerned, which were outside the Composition Scheme, the respondentauthority was not correct to pass order of authorisation under subsection 7 of Section 29 for the re-assessment, as the same had attained finality and was binding - As the order of authorisation for re-assessment is based on the fact that the capital goods should have been included in the value of work contract and was liable to be assessed @ 6%, respondent no.2 had no other material on record to form the basis for reason to believe that the income has escaped assessment. The order dated 15.3.2019 authorising the respondent no.3 for re- assessment for assessment year 2010-11 is against the well settled principle of law and is unsustainable. Once the Assessing Authority has assessed the value of work contract and passed assessment order and taxed the assessee @ 2%, since the value of goods imported from outside the State, was less than 5% of the total amount of contract money, the respondent no.2 did not have any material to believe that whole or any part of turnover of dealer has escaped assessment to tax or has been under assessed or assessed to tax at a lower rate than at which it was assessable. Petition allowed. 2019 (12) TMI 800 Valuation - sale of Gypsum - inclusion of freight charges paid by the Assessee for delivery of Gypsum sold by it to the customer - Tamil Nadu GST Act - HELD THAT:- The Division Bench of this Court in the case of INDIA METERS LIMITED VERSUS STATE OF TAMIL NADU [ 2001 (11) TMI 979 - MADRAS HIGH COURT] was concerned with almost similar controversy where the Assessee/Dealer supplied power meters to the State Electricity Board under a F.O.R. Destination contract and claimed under Rule 6(c) of the TNGST Rules that the freight charges were not part of taxable turnover. Thus, mere bifurcation of the sale price of the goods in a mutual contract between the parties under a separate bargain or even a common bargain will not be material and so long as the contract of sale is F.O.R. Destination and the contract of sale of goods results in the transfer of property of goods at the door steps of the buyer, all pre-sale expenses incurred by the selling dealer will be part of the sale price or taxable turnover. The deduction under Rule 6(c) of the TNGST Rules cannot be claimed by the selling Dealer, contrary to the specific terms of the F.O.R. Destination contract. Once the terms of the contract clearly specified, the contract of sale was F.O.R. Destination , the bifurcation of total sale price in two or three parts, as has been done in the present case like price for Gypsum, freight charges and loading and stacking charges will not be material, insofar as the question of determination of the taxable turnover is concerned. It is trite law that the Rule cannot go beyond the four corners of the main statutory provisions. The definition of taxable turnover does not make any such exclusions and it is clear that all pre-sale expenditure incurred by the seller/dealer are part of sale price including the freight as in the present case will fall under taxable turnover. The learned Sales Tax Tribunal as well as the Assessing Authority were justified in upholding the imposition of the tax on such part of the freight charges on the Assessee in the present case - Petition dismissed.
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