TMI Tax Updates - e-Newsletter
December 30, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. A virtual effacement of legal principles

   By: Sandeep Garg

2. Clerical mistake in Part-B of e-way bill is excused by Additional Commissioner of State Tax Himachal Pradesh in the case of M/s. K.B.Enterprises vs Asstt. Commissioner of State Taxes and Excise of State Goods and Service Tax, Chamba.

   By: Ganeshan Kalyani

Notifications

GST - States

1. F A 3-34/2017/1/V(75) - dated 22-11-2019 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-34/2017/1/FIVE(67) dated the 30th June, 2017

2. F A 3-04-2019-I-V (76) - dated 22-11-2019 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-04-2019-1-V(14) dated the 8th February, 2019

3. 72/2019-State Tax - dated 23-12-2019 - West Bengal SGST

Seeks to notify the class of registered person required to issue invoice having QR Code

4. 71/2019-State Tax - dated 23-12-2019 - West Bengal SGST

Seeks to give effect to the provisions of sixth proviso to rule 46 of the WBGST Rules, 2017

5. 70/2019-State Tax - dated 23-12-2019 - West Bengal SGST

Seeks to notify the class of registered person required to issue e-invoice

6. 69/2019-State Tax - dated 23-12-2019 - West Bengal SGST

Seeks to notify the common portal for the purpose of e-invoice

7. 68/2019-State Tax - dated 23-12-2019 - West Bengal SGST

West Bengal Goods and Services Tax (Eighth Amendment) Rules, 2019

SEBI

8. SEBI/LAD-NRO/GN/2019/46 - dated 26-12-2019 - SEBI

Grant of renewal of recognition - India International Clearing Corporation(IFSC) Limited

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/DF1/CIR/P/2019/169 - dated 27-12-2019

Measures to strengthen the conduct of Investment Advisers (IA)

DGFT

2. Trade Notice No. 45/2019-20 - dated 27-12-2019

Corrigendum to Trade Notice No.44/2019-20 dated 26.12.2019.

3. 50/2015-20 - dated 27-12-2019

Amendment in Paragraph 2.79 D in the HBP of the FTP 2015-20 to notify the procedure for export of SCOMET items for demo/display/exhibition/tenders/ RFP/RFQ/NIT purposes

Highlights / Catch Notes

GST

• Bail Denied for Alleged GST Fraud; Accused May Compound Offense u/s 138 of CGST Act.

  Case-Laws - HC : Bail application - allegation that GST invoices issued without any supply of the goods - In consideration of the gravity of the economic offence, the petitioner is not entitled to be enlarged on bail, however, the petitioner is at liberty to approach the authority for compounding of the offence u/s 138 of CGST Act
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• GST Act Sections 129 & 130: Confiscation Orders Valid Without Physical Goods; Redemption Fines Enforceable Post-Release.

  Case-Laws - HC : Confiscation of Goods and vehicle - Sections 129 and 130 of GST - Even in the absence of the physical availability of the goods or the conveyance, the authority can proceed to pass an order of confiscation and also pass an order of redemption fine in lieu of the confiscation. In other words, even if the goods or the conveyance has been released under Section 129 of the Act and, later, confiscation proceedings are initiated, then even in the absence of the goods or the conveyance, the payment of redemption fine in lieu of confiscation can be passed.
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• GST Sections 129 & 130: Goods/vehicles can't be detained just for lesser tax paid; Assessing Authority to handle disputes.

  Case-Laws - HC : Detention of Goods and vehicle - Sections 129 and 130 of GST - The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings "for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax.
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• Sections 129 and 130 of GST Act operate independently, distinct from Customs and Excise Acts, for detaining goods and vehicles.

  Case-Laws - HC : Detention of Goods and vehicle - Sections 129 and 130 of GST Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of GST Act - The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct
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• Call for Legislative Review: Address Inconsistencies in GST Penalties u/ss 129 and 130(i)(v) for Fair Enforcement.

  Case-Laws - HC : Interpretation of statute - Confiscation of goods alongwith conveyance - exercise of power arbitrarily and without any application of mind. - for the same breach and/or contravention of the provisions of the Act, there are two types of penalties provided under Section 129 and Section 130(i)(v) of the Act - the Legislature should, once again, look into both the provisions, i.e, Sections 129 and 130 of the Act and amend the sections accordingly so as to remove certain inconsistencies in the two provisions.
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Income Tax

• Petitioner Bound to 4% TDS Agreement u/s 197(1) After Revenue Authorities' Acceptance.

  Case-Laws - HC : Application for NIL TDS Certificate u/s 197 (1) - since the petitioner requested the respondent to deduct the tax @ 4% + applicable surcharge & cess for the entire contractual revenues, revenue was justified in accepting the same and the petitioner cannot be permitted to resile there from, once the department has accepted petitioner’s proposal.
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• Software License Payments Deemed Taxable Royalties Under DTAA and Section 9(1)(vi) of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - Royalty - Assessee purchased certain software licenses from M/s.Saipem SPA, Italy, which were used by assessee for providing services to customers for various support functions in accounting, reporting, etc.- payments towards grant of license/software are taxable as Royalty both under DTAA as well under provisions of Section 9(1)(vi)
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• Valuation Officer Error: Incorrect Rate Applied for Capital Gains; Rent Capitalization Method to be Used for Correction.

  Case-Laws - AT : Addition on account of long-term capital gain on sale of properties - VO had applied CPWD rate whereas he should have applied PWD rates and should have allowed depreciation @95% of cost taking the life of properties at 60 years. The AO is therefore, directed to consider value of property as per Rent Capitalization Method and compute capital gains accordingly.
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• Court Waives Penalty for TDS Default u/s 271C; Accepts Assessee's Genuine Belief of Non-Requirement.

  Case-Laws - AT : Penalty u/s. 271C - TDS default - The plea of the Assessee that failure to deduct tax at source was unintentional and was under the bonafide belief that tax is not deductible on payments in question has to be accepted in the given facts and circumstances of the case.
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• Income Additions Confirmed Due to Unverified Share Capital and Premium Entries from Paper Companies, Lacking Creditworthiness Evidence.

  Case-Laws - AT : Addition on account of share capital and share premium - entries had been taken from paper companies and Credit worthiness of the Parties as well as the genuineness of the transaction had not been discharged by the assessee - additions confirmed.
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• Penalty Waived for Cash Loan Violation: Section 271D Penalty Overturned Due to "Reasonable Cause" u/s 273B.

  Case-Laws - AT : Penalty u/s 271D - obtaining cash loan in contravention of section 269SS - the cash has been deposited directly in the Bank account of assessee, for which assessee has no control - considering the issue in the light of "reasonable cause" u/s 273B, penalty waived.
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• Section 153A: Presumption of Ownership for Documents Found During Searches Limited to Assessee's Premises Only.

  Case-Laws - AT : Assessment u/s 153A - As per section 292C,, the loose sheets, books of accounts found during the course of search /survey are presumed to be belonging to the assessee, where the search or survey is conducted - But, since search was conducted at the premises of other person, presumption u/s 292C not applicable to the assessee.
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• AO to Verify Doctor Payment Relationship for Section 271C Penalties; No Employer-Employee Status Means No Tax Demand.

  Case-Laws - AT : Penalty u/s 271C - Payment to Doctors - Employer / Employee relationship or not - AO directed to verify the facts - If it is found that these doctors were providing professional services to assessee which satisfies requirement of a visiting doctor, undoubtedly, it cannot be held that relationship between assessee and the concerned doctors were that of employee-employer and no demand could be raised under section 201(1) and 201(1A) of the Act. O
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• Income Tax Registration: Section 12AA's Role in Charitable Activities and Advancing Public Utility Objectives.

  Case-Laws - AT : Registration u/s 12AA - advancement of any other object of general public utility - Charitable activity u/s 2(15) - activity of providing training in various fields to various persons and the objects also includes preservation of environment, yoga, medical relief and relief of poor. - Only certain photographs will not prove that the assessee is engaged in the educational activities or any other specific activities as claimed by it
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• Inherited Property Tax: Capital Gains Taxed Individually, Not Jointly, as Per Inheritance Rules.

  Case-Laws - AT : Capital gain on property inherited - the property inherited by the respective assessees is their individual property and, therefore, the capital gains, if any, is exigible to tax in their individual hands alone.
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• Section 263 Revision Upheld: AO Ignored Section 43CA in Business Asset Transfer Valuation for Stamp Duty Purposes.

  Case-Laws - AT : Revision u/s 263 - if the transfer of asset is to be assessed under the head `income from business’ necessarily, the provisions of section 43CA would have application and the value of asset for the purpose of stamp duty valuation under the State Government laws would deemed to be the consideration received on account of transfer of such business asset. - AO had failed to take note of the provisions of section 43CA - Revision order sustained.
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• Reassessment Order Annulled: JCIT Lacked Authority u/s 120(4)(b) Due to Absence of Distinct Order.

  Case-Laws - AT : Reassessment order passed by the JCIT is void ab initio and liable to be quashed, because the Assessing Officer who had passed the assessment order does not possesses valid authority and jurisdiction to pass such order in absence of separate order u/s 120(4)(b).
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Customs

• Air Cargo Customs Clearing Agent Faces Inquiry; Department Actions Upheld Under Natural Justice Principles, Ensuring Revenue Duties Unhindered.

  Case-Laws - HC : Principles of natural justice - Inquiry proceedings against Air Cargo Customs Clearing Agent - The action on the part of the department is quite natural and incidental. Hence, the Petitioner cannot preclude the officials of the Revenue from proceeding with their official duty.
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Service Tax

• CENVAT Credit Allowed: Assessee Confirmed as Provider and Consumer of Input Services, Dismissing Allegations Under Service Tax Law.

  Case-Laws - AT : Recovery of CENVAT credit - allegation that input services were not utilized by the assessee but utilised for the broadcasting of channels by the overseas entity - The laudable morality that guided the widening of investigative jurisdiction cannot be read out of context to impute an allegation that is not acknowledged in the law pertaining to levy of service tax. - assessee is not only de facto but also de jure provider of ‘output service’ as well as consumer of the impugned ‘input service’ - credit allowed.
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Case Laws:

• GST

• 2019 (12) TMI 1215
  Release of confiscated conveyance - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This matter was earlier heard on 23.12.2019. Subsequently, the applicant herein had furnished the details of the person at whose instance the goods were loaded in the applicant s conveyance at Morbi. By the notice dated 13.7.2019 issued in Form GST MOV-10 under section 130 of the Central Goods and Services Tax Act, 2017, the respondents have proposed fine of Rs. 60,795/- in lieu of confiscation of conveyance - Since the applicant seeks only release of the conveyance, at this stage, the court deems it fit to allow the application and modify the earlier order dated 27.9.2019 whereby the court had ordered that upon the petitioner depositing a sum of Rs. 4,00,000/- with the concerned authority, which shall be under protest, the respondents shall release the truck in question. The order is modified by directing the respondents to release Truck belonging to the applicant petitioner upon the petitioner depositing a sum of Rs. 60,795/- proposed to be levied by way of fine in lieu of confiscation of conveyance in the notice issued by the respondents under section 130 of the CGST Act - application allowed.

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• 2019 (12) TMI 1214
  Bail application - allegation that GST invoices issued without any supply of the goods to the buyers on commission basis causing loss of more than 98 crores approximately - Section 167 of the Criminal Procedure Code - HELD THAT:- The authority who is empowered to interfere with the liberty of a person by issuing an order of arrest on reasonable belief about necessity of arrest under Section 69(1) of the CGST Act, is also statutory obligated to decide, albeit on logical assessment of facts, that the person concerned is to be prosecuted . Such requirement of sanction must be evident from the records and as the indispensable procedure of law mandates, must be backed by reasons which are prima facie intelligently acceptable. In the present case loss caused to Government Exchequer amounts to Rs. 141,76,46,639/-. Therefore in such a huge economic offence he should not be enlarged on bail. In consideration of the gravity of the economic offence, the petitioner is not entitled to be enlarged on bail, however, the petitioner is at liberty to approach the authority for compounding of the offence under Section 138 of CGST Act - petition dismissed.

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• 2019 (12) TMI 1213
  Interpretation of statute - Detention / Confiscation of goods alongwith conveyance - exercise of power arbitrarily and without any application of mind. - Sections 129 and 130 respectively of the Central Goods Services Tax Act, 2017 - whether the two provisions overlap or are independent of each other? - truck detained by the officer concerned on the ground of absence of the e-way bill in respect of the goods - It is the case of the writ applicants that having come to know about the detention of the truck, they promptly generated the e-way bill in respect of the transaction. The authorities, however, declined to release the goods on the ground that while the goods were being transported, the driver of the vehicle was not carrying the e-way bill - authorities insisted for payment of tax and 100% penalty under Section 129 of the Act as well as redemption fine in lieu of the confiscation equal to the value of goods under Section 130 of the Act. The sum and substance of the submissions canvassed on behalf of the writ applicants is that the proceedings for confiscation of goods or conveyance cannot be initiated under Section 130 of the Act without first complying with the procedure as prescribed under Section 129 of the Act and the second limb of the submission is that once the tax and the penalty is paid under Section 129 of the Act, then the authority has no power to proceed further under Section 130 of the Act for the purpose of confiscation of the goods and the conveyance. HELD THAT:- AS PER J. B. PARDIWALA, J: [Concurrent] (i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive. . (ii) The phrase with an intent to evade the payment of tax in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word evade in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word intent . The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act. (iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway. (iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act. (v) Even if the goods or the conveyance is released upon payment of the tax and penalty under Section 129 of the Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then it would be permissible to them to initiate the confiscation proceedings under Section 130 of the Act. (vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act. (vii) Sections 129 and 130 respectively of the Act are mutually exclusive and independent of each other. If the amount of tax and penalty, as determined under Section 129 of the Act for the purpose of release of the goods and the conveyance, is not deposited within the statutory time period, then the consequence of the same would be forfeiture of the goods and the vehicle with the Government. This does not necessarily imply that the confiscation proceedings can be initiated only in the event of the failure on the part of the owner of the goods or the conveyance in depositing the amount towards the tax and liability determined under Section 129 of the Act. (viii) For the purpose of Section 129(6) of the Act, it would not be necessary for the department to establish any intention to evade payment of tax. If the tax and penalty, as determined under Section 129, is not deposited within the statutory time period, then the goods and the conveyance shall be liable to be put to auction and the sale proceeds shall be deposited with the Government. (ix) Similarly, the reference to Sections 73 and 74 respectively of the Act is not warranted for the purpose of interpreting Sections 129 and 130 of the Act, more particularly, when they all are independent of each other. The provisions of Sections 73 and 74 of the Act are similar to the provisions of Section 11A of the Central Excise Act and Section 28 of the Customs Act, which deal with the adjudication proceedings. Despite this, Section 110 is present in the Customs Act, which speaks about seizure and similarly, Section 129 is present in the Act for detention/seizure. Therefore, Sections 129 and 130 of the Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of the Act. (x) The provisions of sections 73 and 74 respectively of the Act deal with the demands and recovery to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the detention/ seizure . While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilized for any reason, either with mala fide intention or without the same, as the case may be, the provisions of Section 73/74 of the Act would be invoked. However, the provisions of Section 129 of the Act deal with situation where the evasion of tax/contravention of the Act/Rules is detected during transit itself, requiring the adoption of summary like proceedings. Therefore, the said provisions operate in different spheres. (xi) The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. (xii) The provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of seizure of goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, the contention raised on behalf of the writ applicants that the goods which are seized are to be released within a short span of time and that the legislature has not contemplated to retain the goods pending the confiscation proceedings. is not tenable. In addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with the provisional release of the goods, do not contemplate the release of the goods only on payment of penalty and interest but the proposed amount of fine is also to be included for provisional release of the goods. In view of this, the amount of fine should be taken into account while directing the provisional release of the goods/ conveyance as per Section 129(2) read with Section 67(6) of the Act read with Rule 140 of the Rules. (xiii) Although there is no serious challenge to the validity of the provisions of Sections 129 and 130 respectively of the Act, yet it is a settled principle of law that the power to levy tax includes all the incidental powers to prevent the evasion of such tax. The power to seize and confiscate the goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and is intended to operate as a deterrent against the tax-evaders and are, therefore, ancillary or incidental to the power to levy tax on the goods and thus, fall within the ambit and scope of the legislative powers. (xiv) The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax. (xv) Even in the absence of the physical availability of the goods or the conveyance, the authority can proceed to pass an order of confiscation and also pass an order of redemption fine in lieu of the confiscation. In other words, even if the goods or the conveyance has been released under Section 129 of the Act and, later, confiscation proceedings are initiated, then even in the absence of the goods or the conveyance, the payment of redemption fine in lieu of confiscation can be passed. (xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation AS PER : HONOURABLE MR.JUSTICE A.C.RAO: [Addendum] From the plain reading of Sections 129 and 130 of the Act, it is clear that the suppliers or receivers of the goods transport any goods in contravention of provisions of the Act or the Rules made thereunder are liable for the detention or seizure of the goods under Section 129 of the Act and under Section 130 (i)(v) of the Act for confiscation of the goods and conveyance. Thus, for the same breach and/or contravention of the provisions of the Act, there are two types of penalties provided under Section 129 and Section 130(i)(v) of the Act - the Legislature should, once again, look into both the provisions, i.e, Sections 129 and 130 of the Act and amend the sections accordingly so as to remove certain inconsistencies in the two provisions. Let this aspect be looked into by the State Government in accordance with law.

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• Income Tax

• 2019 (12) TMI 1212
  Certificate u/s 197 (1) - application of the petitioner to grant a certificate for NIL deduction of tax at source, on the payments made to it, by Oil and Natural Gas Corporation Ltd. (ONGC-Deductor) - writ of mandamus directing the Assessing Officer to grant a certificate authorizing the aforesaid deductor to make payments to the petitioner without deducting tax at source - HELD THAT:- In absence of a certificate of deduction of tax at source at a lower rate or nil rate, a payer-whose liability it is to deduct tax at source under Section 195 of the Act, is likely to incur a risk of being declared a defaulter. However, if a certificate under Section 197 of the Act is in operation, such a consequence would not arise. At the same time, the certificate under Section 197 of the Act for deduction of tax at lower rate or nil rate, also benefits the Assessee, who would be entitled to receive full payment from the payer without deduction. It is well settled that in matters of taxation there is no question of res judicata because each year s assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period. [ Ref: Instalment Supply (P) Ltd. v. Union of India [ 1961 (5) TMI 53 - SUPREME COURT] ]. We cannot direct the Revenue to hold that the petitioner does not have a PE and give the consequent effect of such finding while deciding an application under Section 197 of the Act. Determination of all these questions would have to be undertaken during the course of regular assessment. The manner of determination of issues relating to the tax deduction and regular assessment are inherently and fundamentally different. While there may be certain circumstances where the finding with respect to the previous year can be taken into consideration, however, in the instant case, we cannot find any reason to hold the approach of Respondents to be patently illegal or erroneous on the face of it. The question of existence of permanent establishment, which requires a detailed enquiry, is not envisaged at the stage of deciding the application for issuance of certificate under Section 197 of the Act. The full fledged investigation can be done by the Assessing Officer during the course of assessment. Petitioner contends that the aforesaid concession was made without prejudice to its legal position , and cannot deprive the petitioner to contest the legal position. However, we cannot ignore the fact that Petitioner took categorical stand and prevailed upon the revenue to accept the declaration made in the said communication. Although the declaration was qualified, yet, since the petitioner requested the respondent to deduct the tax @ 4%+applicable surcharge cess for the entire contractual revenues, revenue was justified in accepting the same and the petitioner cannot be permitted to resile there from, once the department has accepted petitioner s proposal. Writ petition is dismissed

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• 2019 (12) TMI 1211
  Addition u/s 37 and 40A - Disallowance of excess cane price paid to members and non members - Respondents who are sugarcane co-operative societies governed by the Maharashtra Co-operative Societies Act, 1960 had paid a price of sugarcane purchased from its members and non-members at a certain rate - AO had disallowed the price paid by the Respondents Assessee to its members as well as non-members as it was in variance with the minimum ex-factory price fixed by the Central Government under Clause 3(1) in Sugarcane (Control) Order, 1966 as revised from time to time HELD THAT:- The learned Counsel for the parties are ad idem that in view of these decisions, the impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) will have to be set aside. The learned Counsel further points out that though the Division Bench of this Court in The Commissioner of Income Tax-I v. Kadwa Sahakari Sakhar Karkhana Ltd [ 2019 (4) TMI 1804 - BOMBAY HIGH COURT] in identical circumstances, had set aside the orders passed by the Tribunal and the Commissioner (Appeals) and had remanded the proceedings to the Commissioner of Income Tax (Appeals) for reconsideration, in view of the decision of the Supreme Court in the case of Tasgaon Taluka SSK Ltd. [ 2019 (3) TMI 321 - SUPREME COURT] wherein the Apex Court had sent the proceedings to the Assessing Officer, they will have to be sent to the Assessing Officer. In view of this consensus at the bar, these appeals filed by the Revenue are allowed. The impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) in these Appeals are quashed and set aside. The proceedings stand restored to the file by the respective Assessing Officers to be considered in the light of the law laid down by the Supreme Court in the cases of Tasgaon Taluka SSK Ltd. [ 2019 (3) TMI 321 - SUPREME COURT] and Shri Satpuda Tapi Parisar SSK Ltd. [ 2010 (1) TMI 117 - SUPREME COURT] .

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• 2019 (12) TMI 1210
  Reopening of assessment u/s 147 - reopening after four years - Bogus purchases - HELD THAT:- The reasons supplied along with the impugned notice contain no assertion there was any failure of the petitioner to disclose fully and truly all material facts necessary for the assessment. This omission can be a ground to set aside the Reassessment notice. Pursuant to the reasons given along with first reopening notice Petitioner had supplied all the material regarding the very same allegations against the Petitioner and the same were examined by the AO. All the material was placed before the Assessing Officer by the Petitioner. Acting upon this material, the Assessing Officer had, in fact, made certain additions. Therefore, it cannot be said that there was a failure by the Petitioner to disclose all material facts fully and truly. In the circumstances, the jurisdictional requirement to reopen the assessment proceeding after four years is not present. Neither it has been alleged. In the reasons supplied along with first reopening notice, the issue of bogus accommodation of entries regarding purchases was discussed. The reasons given for second reopening notice reproduced above also refer to the said fact. The reasons also refer to a decision of the Supreme Court in the case of M/s.N.K.Proteins Ltd. [ 2017 (1) TMI 1090 - SC ORDER] Even this decision was before the Assessing Officer in the proceeding pursuant to first reopening notice. The Petitioner, along with its objections, placed explanatory note as to how the said decision of the Supreme Court in M/s.N.K.Proteins did not apply to the facts of the case. Therefore, this aspect was also considered when the proceeding under the first reopening notice was conducted. In the circumstances, the contention of the Petitioner that the impugned reopening notice is issued only on mere change of opinion will have to be accepted. Since we are satisfied that the jurisdictional requirements for reopening of the assessment of the Petitioner for the assessment year 2012-13 after four years are absent, and the action of the Respondent No.1- Assessing Officer is without jurisdiction, the Petitioner is entitled to succeed.

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• 2019 (12) TMI 1209
  Levy of penalty u/s 271(1)(c) - as contended that the instant case of the assessee is covered under the provisions of Section 271AAA - HELD THAT:- Since in the present case search was conducted on 30.7.2009, hence section 271AAA is applicable for the assessment year 2010-11 only as the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search. Explanation 5A(b) to section 271(1)(c) was applicable for the assessment years 2005-06, 2006-07 and 2007-08 as the date for filing the returns has already been expired and the assessee has not declared this income in the returns. From the assessment orders, we find that the assessee has not declared the surrendered income in the returns filed in response to the notice issued u/s 153A(1)(a). Thus, the submissions of the ld. AR arguing that the income surrendered has been reflected/assessed is not correct on facts. Rather, it is the addition made by the Assessing Officer based on the material found and seized during the course of search. The assessee has not declared any income in the returns filed in response to the notice issued u/s 153A(1)(a) more than what has been declared in the regular returns.The addition has been made by the revenue based on the seized material. The due date of filing of return has already been expired. AR contention that the presidential assent has been received on 13.08.2009, hence not applicable cannot be accepted as the provisions of the Act clearly says that this provision is applicable with retrospective effect from 01.06.2007. Keeping in view, since no prima facie case can be made on applicability of any legal ground on this issue, we hereby decline to admit the additional grounds taken by the assessee on this issue. Issue of notice u/s 274 read with Section 271(1)(c) dated 23.12.2011, we find that the Assessing Officer has not specified under which limb of the provisions of Section 271(1)(c), the penalty is being initiated and levied. The specific mention whether the penalty is levied whether for concealment of particulars of income or for furnishing inaccurate particulars of income. As relying on M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] we hereby hold that the penalty levied by the Assessing Officer is liable to be obliterated. - Decided in favour of assessee.

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• 2019 (12) TMI 1208
  MAT credit - after the appeal effects are given by the AO for earlier years, the balance MAT credit may be allowed in the hands of the assessee - HELD THAT:- We find merit in the claim of the assessee and direct the AO to allow the MAT credit, if any, determined after giving appeal effect in earlier years. The Ground of appeal is thus allowed. Short credit of tax deducted at source - HELD THAT:- We hold that where the assessee is able to furnish the necessary details with regard to tax deduction at source out of the amounts due to it, then the action which follows is allowing the credit of such tax deducted at source to the account of the deductee. In case where the deductor deposits the tax deducted at source to the credit of the Central Government and the deduction reflects in Form No.26AS may be on a later date, then it is incumbent upon the assessee to produce the necessary evidence in this regard and it is also the duty of the Assessing Officer to allow such credit of tax deducted at source, as taxes paid in the hands of the deductee assessee. We direct the Assessing Officer to allow the credit of tax deducted at source in the hands of the assessee, where the assessee produces the primary evidence of same being deducted tax at source out of the amount due to it. The ground of appeal no. 6 is thus allowed. Charging of interest u/s 234A - assessee had filed the return of income on 30.11.2015 which was the prescribed due date for filing the return of income by the assessee u/s 139(1) - HELD THAT:- We find merit in the plea of the assessee that where the due date of filing return of income was 30.11.2015 and since the assessee had filed return of income on 30.11.2015, then there was no merit in charging of interest u/s 234A Charging of interest u/s 234C - The said interest is to be computed on the returned income of the assessee and not the income assessed by the Assessing Officer. The Assessing Officer may verify the stand of the assessee in this regard and re-compute the interest chargeable u/s 234C

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• 2019 (12) TMI 1207
  TDS u/s 195 - Royalty - Assessee purchased certain software licenses from M/s.Saipem SPA, Italy, which were used by assessee for providing services to customers for various support functions in accounting, reporting, etc.- Addition u/s 40(a)(i) - whether the aforesaid payments are Royalty payment u/s 9(1)(vi) of the 1961 Act and Article 13(3) of India-Italy DTAA which were subject to income-tax deduction at source u/s 195 ? - HELD THAT:- As could be seen from decision of Hon ble Karnataka High Court in the case of CiT v. Synopsis International Old Limited [ 2013 (2) TMI 448 - KARNATAKA HIGH COURT] which decision was rendered in context of Royalty as defined in India-Ireland DTAA wherein definition of Royalty is paramateria to definition of Royalty as used in India-Italy DTAA(except exclusion to aircraft in case of India- Ireland DTAA as detailed above by us in this order by reproducing relevant Article of both the treaties) with which we are seized of and Hon ble Karnataka High Court has held that grant of non-exclusive non transferable license in computer software with no right to sub-lease or transfer shall fall within Royalty both under DTAA as well u/s 9(1)(vi) of the 1961 Act read with explanations and shall be chargeable to incometax under the provisions of the 1961 Act. Hon ble jurisdictional High Court has affirmed the ratio of decision of Hon ble Karnataka High Court in the case of Synopsis International Old Limited, in a recent judgment in the case of Zylog Systems Limited [ 2019 (5) TMI 1209 - MADRAS HIGH COURT] . We are bound by aforesaid decision of Hon ble Jurisdictional High Court decision and Respectfully following the decision of Hon ble Madras High Court in the case of Zylog, we allow appeal of Revenue

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• 2019 (12) TMI 1206
  TP Adjustment - international transaction of Allocation of shared service charges - whether the transaction of Payment of shared service charges on one hand and Import of raw material and Export of finished goods on the other, namely, the manufacturing activity, can be construed as closely linked transactions ? - HELD THAT:- We are dealing with a situation in which the assessee is trying to club the transaction of Payment of shared service charges with the transactions of manufacturing activity, which is a step further away from the technical know-how in the process of manufacturing. In view of the foregoing discussion, it is held that the instant transaction of payment of shared service charges cannot be aggregated with the international transactions concerned with the manufacturing activity. We, therefore, reject the aggregation approach as put forth on behalf of the assessee and ex consequenti, the additional ground is hereby dismissed. We find that the question of aggregation or segregation of the transactions can arise only when it is proved that the assessee actually availed the services for which it made the payment. We have noted supra that the assessee has admittedly not proved the receipt of the services. It has further been admitted by the ld. AR that the assessee has no evidence to prove the receipt of services through correspondence or e-mails or visits of the personnel of the AEs. Once the addition is sustained on the ground that the assessee failed to prove the receipt of services at the very outset, there can be no question of any aggregation. It is held that neither the aggregation of the transaction of allocation of shared service charges is permissible with the other reported transactions under the TNMM in the facts as are instantly obtaining nor the assessee could adduce any evidence either for the cost sharing arrangement without any mark up or the actual receipt of services. We, therefore, uphold the disallowance. Addition in respect of the international transaction of Payment of Trademark charges - HELD THAT:- Once it was found that the assessee actually paid royalty at total of 4.5% under the international transaction, then the course open to the TPO should have been to determine the ALP of the international transaction of payment of royalty including use of Contractual Trademarks by considering total payment at 4.5%, instead of shutting the door by holding that there was no need to pay further 0.5% of Net Sales Volume when the assessee was already paying 4% towards royalty. The fact that the assessee did pay royalty at 4.5% clearly demonstrates that the payment of further 0.5% ought to have been considered as increase in the rate of royalty from 4% to 4.5%, being the international transaction to be benchmarked by considering total payment of royalty at 4.5%. As the authorities below have proceeded with the disallowance of 0.5% translating into an addition of Rs. 19,96,178/-, we set-aside the impugned order on this score and remit the matter to the file of AO/TPO for determining afresh the ALP of the international transaction of payment of royalty including towards use of Contractual Trademarks by considering the transacted value of the transaction at a combined rate of 4.5%, consisting of Payment of royalty at Rs. 1,99,62,183/- and Payment of Trademark charges at Rs. 19,96,178/-. If in such a fresh processing of the total royalty transaction under the transfer pricing provisions, some adjustment is called for, the same be made. Needless to say, the assessee will be allowed a reasonable opportunity of hearing.

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• 2019 (12) TMI 1205
  Disallowance of dividend distribution by the AO - HELD THAT:- As decided in own case [ 2018 (7) TMI 1876 - ITAT AMRITSAR] we find no basis for the said addition. Even assuming, for the sake of argument, that the dividend distribution tax was indeed payable by the assessee-company, the Revenue can only proceed under law to exact the same. It does not in any manner lead to the inference of any income having accrued to the assessee as a result. Rather, the said tax, where paid, would stand to be debited to its operating statement (P L A/c) for the year. We decide accordingly. Addition on account of standard loan disallowed by the AO - HELD THAT:- Issue to be decided against revenue as relying on assessee own case [ 2018 (7) TMI 1876 - ITAT AMRITSAR] Addition on account of losses of fraud committed at main branch, Hoshiarpur and on account of contra entry of interest not decided by the CIT(Appeal) - HELD THAT:- We find that while disallowing the total amount of Rs. 6,00,75,946/-. The AO has also included the amount of Rs. 2.17 crores being provisions made against main branch office of fraud and Rs. 2.58 crores being interest paid to main branch Hoshiarpur without confronting the assessee on this issue. Therefore, we are of the considered opinion that this issue is set aside to the file of the AO for examination and reconsideration of the same after affording a reasonable opportunity of being heard to the assessee. In view of this ground of appeal is set aside to the file of the AO in entirety for reconsideration of the disallowances made. Disallowance of fuel and hire charges debited to the P L account - HELD THAT:- In the instant case, we find neither of these two conditions being satisfied; the former being in fact incidental in-as-much as a voluntary expenditure, shown to be for the purpose of the assessee s business, would qualify for deduction. In our considered view, therefore, the impugned expenditure does not meet the test of section 37(1), and stands rightly disallowed by the Revenue. We decide accordingly, and the Revenue succeeds

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• 2019 (12) TMI 1204
  Deduction u/s 54F - claim rejected as assessee has not deposited the unutilized sale consideration in capital gains account scheme before the due date for filing the return of income for asst. year 2013- 14 as per sec. 54F(4) and construction has not been completed within 3 years from the date of transfer of original asset - HELD THAT:- If the assessee has invested entire sale consideration within three years, then the requirement of complying with provisions of sec.54F(4) cannot come into the way of the assessee for claiming deduction u/s 54F. Assessee has not completed the construction within 3 years of date of transfer of original asset - As decided in SAMBANDAM UDAYKUMAR [ 2012 (3) TMI 80 - KARNATAKA HIGH COURT] if he has invested the money in construction of a residential house, merely because the construction was not complete in all respects and it was not in a fit condition to be occupied within the period stipulated, that would not disentitle the assessee from claiming the benefit under section 54F of the Act. The essence of the said provision is whether the assessee who received capital gains has invested in a residential house. Once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects and as required under the law, that would not disentitle the assessee from the said benefit. What is required to be seen is whether the assessee has invested the sale consideration proportionate to the deduction claimed u/s 54F of the Act in construction or purchase of new residential house within the period prescribed in the section. Accordingly, we set aside the order passed by Ld CIT(A) and restore the issue to the file of the AO for verifying the quantum of amount spent by the assessee before three years from the date of transfer of original asset and accordingly for examining the deduction claimed u/s 54F of the Act. - Decided in favour of assessee.

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• 2019 (12) TMI 1203
  Continuance of approval U/s. 10(23C)(vi) in the prescribed form No. 56D - CIT (E) rejected the application - HELD THAT:- In the case of the assessees, the Revenue had earlier granted approval U/s. 10(23C)(vi) of the Act by examining the activities mentioned in the deed of the assessees societies. Thereafter, when the assessees societies had violated the conditions stipulated by the Ld. CIT while granting the approval U/s. 10(23C)(vi) of the Act, additions were made and the approval withdrawn for those assessment years. However, it cannot be presumed that the assessees societies is bound to err year after year by violating the provisions of section 10(23C)(vi) of the Act. It will not be appropriate to withdraw the approval or resist from granting approval U/s. 10(23C)(vi) of the Act when the assessees societies are conducting its charitable activities in the subsequent years sincerely and diligently for the benefit of the public at large without violating any of the conditions stipulated. Such action of the Revenue will deprive the beneficiaries of the assessees societies in obtaining the benefits which is detrimental to the larger interest of the public. As it appears from the orders of the Ld. CIT dated 29/09/2017, during the period 1/4/2016 till 29/09/2017, no violation is pointed out. Further, from the assessment order of the assessees for the AY 2015-16 dated 27/12/2017 and 22/12/2017 (cited supra) it is evident that there was no violation. In such circumstances, we fail to understand as to why the assessee societies have to be penalised which will ultimately result in hardships to the public at large Since during the relevant period the assessee societies has neither violated any of the provisions of section 10(23C)(vi) of the Act nor conducted itself detrimental to the conditions stipulated by the Ld. CIT while granting approval U/s. 10(23C)(vi) of the Act on the earlier instance, and further placing reliance on the Circular of the CBDT No.14/2015 dated 17/08/2015 and the decision o COUNCIL FOR THE INDIAN SCHOOL, CERTIFICATE EXAMINATIONS VERSUS DIRECTOR GENERAL OF INCOME TAX [ 2014 (5) TMI 898 - DELHI HIGH COURT] we are of the considered view that the decision of the Ld. CIT (E) to reject the application filed by the assessees U/s. 10(23C)(vi) is not justified. - Decided in favour of assessee.

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• 2019 (12) TMI 1202
  Denial of claim of deduction u/s 36(1)(viia) - HELD THAT:- We find that identical issue arose in assessee s own case for A.Y. 2013-14 and the Coordinate Bench of the Tribunal by following the decision of the Tribunal in the case of Bhagini Nivedita Sahakari Bank Ltd [ 2018 (12) TMI 322 - ITAT PUNE] had decided the issue in assessee s favour.

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• 2019 (12) TMI 1201
  Addition on account difference between stock declared land stock offered for taxation and treating the same as retraction from surrendered amount - Survey u/s 133A - HELD THAT:- No other incriminating material was found during the course of survey relating to unaccounted stock, excess physical stock was calculated by Revenue authority on estimative and presumptive basis. The stock statement prepared by the survey team on the date of survey itself seems to be on a loose wicket since the remarks column mentioning about the weighment of stock in trucks do not correlate with any actual weighment slip and also the alleged unrecorded stock is practical impossible to be stored on the available space with the assessee. Even after the retraction assessee had not retracted the total surrender but he prudently kept separate record of the sales of physical stock which was 250.03 MT whereas the book stock on the date of survey was 85.433 MT. The difference i.e. 165.27 MT is accepted as unrecorded stock which has been offered to tax by the assessee. CIT(A) erred in confirming the addition made by the AO for unrecorded stock of Rs. 84,00,000/- merely on the basis of recorded statement and without basis of any material evidence and there the same needs to be deleted. We, accordingly order so and allow ground no.1 raised by the assessee. Ad hoc addition for offering lower net profit stands confirmed by the CIT(A) - HELD THAT:- AO after taking average of last two years net profit rate applied the same on the turnover disclosed by the assessee and after comparing with the profits disclosed in the preceding year addition of Rs. 2,33,227/- made for lower net profit. We, observe that during the course of assessment proceedings itself it was submitted that the main reason for the lower net profit during the year was due to increase in the depreciation expenditure which increased by Rs. 2,54,512/- in comparison with the preceding year. This fact went unattended by both the lower authorities Had the AO had considered the increased amount if the depreciation expenses at Rs. 2,54,512/- then the net profit for the year under appeal would not have decreased very significantly from the preceding year and would have been consistent as per the past history. There is no justification with the Ld. AO of ignoring the material facts and making the addition for lower net profit of Rs. 2,33,227/- and the same deserves to be deleted. We, accordingly order so and delete the addition for Rs. 2,33,227/-. Ground No.2 of the assessee s appeal is also allowed.

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• 2019 (12) TMI 1200
  Addition on account of long-term capital gain on sale of properties - value of property as per Rent Capitalization Method - as contended that the properties sold were tenanted properties for last 30 years and same were sold to them only as is where basis and were subject to Rent Control Act - revenue contended section 50C reference is applicable for made is for valuation of income-tax purpose and it is not applicable to and provisions of section 16A of Wealth Tax Act are not applicable - HELD THAT:- We find that the provision of section 50C (2) which specifically provides that where reference is made by the AO to Valuation Officer the provisions of section 16A (2), (3), (4) (5) of Wealth Tax Act would apply in the same manner as they apply to valuation referred under Wealth Tax Act. The Rule 3 of Schedule III of Wealth Tax Rules specifically provide for method of valuation of rented building as Rent Capitalization Method. The VO has only stated that it has been valued as per guidelines of Board. When there is specific provisions in the Act and Which provides valuation as per Rent Capitalization Method. In the case of tenanted properties. Hon`ble Rajasthan High Court in the case of CIT v. Pramod Chand Soni [ 2017 (9) TMI 1686 - RAJASTHAN HIGH COURT] held that where properties are rented for more than 50 years and was in possession of tenants at the time of execution of sale deed hence, it could be reasonably inferred that such property could not fetch prevalent market rate as compared to other properties. Similarly in the case of Ramendra Vikram Singh v. ITO [ 2009 (2) TMI 895 - ITAT, LUCKNOW] it was held that DVO report under section 50C (2) is binding on the AO and it was also held that Section 16A of Wealth Tax Act read with Rule and Schedule III of Wealth Tax Act are applicable to the valuation made under section 50C of the Act. Similar findings were given by the Hon`ble Punjab Haryana High Court in the case of CIT v. Prem Nath Anand [ 1976 (11) TMI 61 - PUNJAB AND HARYANA HIGH COURT] . On careful consideration of facts and circumstances and taking into consideration the cumulative effect of all the circumstances, we are of the considered view that the VO should have determined the valuation of properties by taking Rent Capitalization Method. We further, note that the VO had applied CPWD rate whereas he should have applied PWD rates and should have allowed depreciation @95% of cost taking the life of properties at 60 years. The AO is therefore, directed to consider value of property as per Rent Capitalization Method and compute capital gains accordingly.

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• 2019 (12) TMI 1199
  Unexplained excess cash found during the course of survey - survey u/s 133A - HELD THAT:- Tribunal had categorically directed the A.O. to make verification of the claim of the assessee but instead of making the claim of the assessee, the A.O. yet again made additions, which have been challenged by the assessee in ground Nos.1 to 7. All the grounds are being disposed together for the sake of convenience and brevity. In respect of cash on hand of Rs. 2,50,000/- the explanation of the assessee is that there was some cash on hand. This submission was made before the A.O. by the assessee. However, the A.O. did not verify the contention of the assessee. As per the assessee, there was repayment by the debtors of Rs. 1,62,524/- opening cash balance was Rs. 36,389/- interest received on amount received from debtors of Rs. 40,000/- sale of opening stock of Rs. 35,800/- proceed of sale of stock of Rs. 2,000/-. All these aspects ought to have been verified by the A.O. Even the Ld. CIT did not call for any remand report from the A.O. regarding these submissions.Therefore, under these facts and circumstances cannot sustain the additions made by the A.O. and the A.O. is directed to delete the additions - Decided in favour of assessee.

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• 2019 (12) TMI 1198
  Long term capital gain or short term capital gain - period of holding - characterization of shares held by assessee in Scorpio beverages private limited whether long-term capital asset or a short-term capital asset - HELD THAT:- Following the decision of the coordinate bench in the case of Mr. Analjit Singh [ 2017 (12) TMI 306 - ITAT DELHI] we also hold that the gain on transfer of shares of Scorpio beverages P Ltd would be taxable as long-term capital gains and not short-term capital gains as assessee has held those shares for more than 12 months. Thus, ground number 4 8 of the appeal of the assessee is allowed to above extent. Sales consideration received accrued to the assessee - HELD THAT:- on one side, preference share capital invested has been considered in the investment in total asset of that company whereas preferential capital issued by the company has not been included in the liability. This resulted in to including that value twice in the valuation of equity shares of that company. Therefore, there is an apparent misinterpretation of the financial statements of the subsidiaries. Therefore, the learned assessing officer is directed to correct the valuation of above five companies by including the value of preference share capital issued by these companies in the total liabilities. Such total liability is to be reduced from total assets of those companies to derive at the value of equity shares. Further, the Assessing Officer is also directed to verify all other figures from the audited balance sheets of all these companies as submitted by assessee and correct it, if it is found that they have been wrongly plotted, compute the value accordingly. Assessee is directed to put before AO such errors and which shall be rectified, if found in order. Capitalization of interest expenditure - HELD THAT:- Cordinate bench has dealt with this issue in case of husband of appellant thus we dismiss ground of the appeal and confirm the orders of the lower authorities in not allowing the capitalization of interest cost of INR 1 00902358/ as part of the cost of acquisition while calculating capital gain on sale of shares of Scorpio beverages private limited. Allowance of brought forward long-term capital loss brought forward from assessment year 2011 12 - HELD THAT:- Above loss was inadvertently claimed by the assessee at INR 2 49822064. Even in the grounds of appeal mentioned the assessee in ground number 23 has mentioned an astronomical figure, which is not the correct fact. Despite this assessee may be granted the brought forward long-term capital loss of INR 2 4982206/ if found in accordance with the law. Similar is the ground number 26 of the appeal where the claim of the assessee is about set off the brought forward long-term capital loss of INR 15336932/ for assessment year 2011 12. Assessee is directed to file requisite details before the assessing officer and the AO may examine the same and grant set off of the brought forward long-term capital losses, if found in accordance with the law Grant of credit for tax deduction at source and advance tax - HELD THAT:- CIT A has correctly held that if the above amount has been shown in form number 26AS, then AO is directed to grant the credit for tax deduction at source and advance tax paid. No infirmity can be found in such a direction given by the learned CIT A. Assessee is further directed to submit the requisite details before the learned assessing officer about the tax deduction at source as well as the advance tax paid and reconcile the same with form number 26AS. AO may verify the same and grant credit for the same in accordance with the law. Accordingly, ground number 29 of the appeal of the assessee is allowed with above direction.

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• 2019 (12) TMI 1197
  Addition u/s 68 - Documentary evidences to prove identity, genuineness and creditworthiness of the cash creditors - HELD THAT:- Looking to the fact that the evidence to the best possible extent have been filed by the assessee to explain the cash creditors and the revenue authorities were competent enough to proceed against the cash creditors if they were not satisfied with statement on oath given by the cash creditors. It is clear that the assessee has proved all the ingredients of section 68 of the Act in order to clear the burden of proof. The onus thus shifted on the Revenue to rebut which remained unfulfilled. The persons advanced the loan are man of means and nearly 70% of loan creditors are assessed to tax and the remaining are agriculturists having sufficient agricultural land to earn agricultural income. The affidavit has been filed by all the cash creditors and this fact cannot be disputed. It is also brought to a notice that the alleged loans accepted through account payee cheque were repaid in a month time, has not been disputed by the revenue. AO was made a case of capital building since loans were repaid within a month. Sufficient material placed on record by the assessee during the course of hearing before both the lower authorities and before us including the statement on oath taken by the Ld. AO and other documentary evidences referred hereinabove, are of the considered view that assessee had proved identity, genuineness and creditworthiness of all the cash creditors beyond doubt for which impugned addition u/s 68 - Appeal of the Revenue stands dismissed.

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• 2019 (12) TMI 1196
  Disallowance of bad debts written-off and debited under the head provision for liquidated damages in the financial statement of the year under assessment - HELD THAT:- When nature of the amount due has not been disputed by the revenue authorities being irrecoverable from the customers against various jobs carried out by the assessee in the course of business nor disputed the explanation given by the assessee before the Ld. CIT(A), aforesaid deductions is eligible for claim during the year under assessment. So far as question of treating the claim of payment of liquidated damages in the nature of penalty is concerned, when aforesaid damages are undisputedly business expenditure incurred on account of contractual default, the contractual liability cannot be treated as a penal liability. Hon ble Supreme Court in case of Prakash Cotton Mills Ltd. vs. CIT [ 1993 (4) TMI 3 - SUPREME COURT] also decided the issue as to when the amount paid by assessee as interest or damages or penalty could be regarded as compensatory in character as would entitle such assessee to claim it as an allowable expenditure u/s 37(1) We are of the considered view that when the damages paid by the assessee are business expenditure incurred on account of contractual liability the same cannot be treated as penal liability as has been held by Ld. CIT(A). Moreover, once it has come on record that the amount in question is irrecoverable from the customer and has been written off in the books of accounts during the year under assessment the amount is eligible for deduction u/s 36(1)(vii) of the Act as claimed by the assessee. - Decided in favour of assessee. Addition of deemed dividend u/s 2(22)(e) - HELD THAT:- Amount paid by assessee company to TPPL was on account of sale of plant and machinery and not on account of loan and in view of CBDT Circular No. 19/2017 of 12.06.2017 the same is a commercial transactions and provisions contained u/s 2(22)(e) are not attracted. So, we are of the considered view that tax, if any, is to be paid on this amount by the shareholder as the amount is not advance but a business transaction being sale proceeds of the sale of plant and machinery by TPPL to the assessee company. - Decided in favour of assessee.

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• 2019 (12) TMI 1195
  Assessment order passed under section 143(3) r/w section 254 - HELD THAT:- We hold that the present appeal filed by the assessee being not against an appealable order as provided under section 253 of the Act, is not maintainable. We must observe, the assessee may be having a strong case in its favour on the issue of not forwarding the draft assessment order before passing the final assessment order. However, that issue relating to the validity of the impugned assessment order has to be decided by the appropriate authority as provided under the statute. In view of the aforesaid, since the appeal of the assessee is not maintainable, we do not find any justifiable reason to entertain the grounds raised by the assessee including the additional grounds. Therefore, the present appeal filed by the assessee deserves to be dismissed in limine without going into the merits of the various issues raised by the assessee. Accordingly, we do so. However, as observed by the co ordinate Bench in case of Tevapharm India (P) Ltd. V/s ACIT [ 2018 (4) TMI 34 - ITAT DELHI ] it is open to the assessee to file an appeal before the first appellate authority and contest all the issues including the validity of the order passed by the Assessing Officer.

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• 2019 (12) TMI 1194
  Disallowance of deduction u/s 43B - sum represented deposit of electricity duty in a designated non-lien bank account - HELD THAT:- considering the declaration filed by the assessee in Form No.8 this issue is restored to the file of the AO for a fresh consideration as per the final outcome of assessee s appeal Addition u/s 14A - HELD THAT:- In absence of separate investment account, it is presumed that investment was taken place from common accounts which consist of borrowed fund, over draft account and other trading account utilised for business purpose meaning thereby the AO categorically held that the assessee has used interest bearing borrowed funds, over draft and other trading funds for the purpose of investment which earned exempt dividend income of the assessee. Also observed by the authorities below that investment activities and business activities has its separate nature in principle and no expenditure is allowable on investment activities, which brings exempt dividend income of the assessee. The AO went up to the extent to observe that if the interest bearing fund would have not utilised for investment purpose, the interest payment expense would have been reduced in accordance with the taxable income of the assessee. AO was right in invoking the provisions of section 14A r.w. rule 8D of I.T.Rules. However, the ld CIT(A) after accepting the alternate plea of the assessee and the computation made thereto by the AO, restricted the disallowance to the amount of Rs. 48,17,000/- under Rule 8D. After carefully considering the orders of lower authorities we are of the view that the CIT(A) was right in restricting and confirming the addition. We, accordingly uphold the findings of the CIT(A) and dismiss the ground of appeal of the assessee. Addition u/s.2(24)(x) - Delayed contribution to EPF was deposited by the assessee - HELD THAT:- In the instant case, it is not in dispute that the contribution to EPF was deposited by the assessee before due date of filing the return of income u/s.139(1) - In view of above findings of Hon ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd. [2018 (9) TMI 798 - DELHI HIGH COURT ] the issue is restored to the file of the Assessing Officer to examine the contributions made with reference to the dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. We clearly obverse that the assessee would be entitled to deductions in terms of section 36(1)(va)

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• 2019 (12) TMI 1193
  Assessment u/s 153A - unexplained expenditure u/s 69C - HELD THAT:- Addition made by the Assessing Officer based on the entries in the books found, belonging to and seized at the premises of the third party, in the absence of cross examination of such party based on which the addition has been made cannot be held to be sustainable in the eyes of the law. - Decided in favour of assessee.

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• 2019 (12) TMI 1192
  Disallowance of expenses incurred towards staff welfare, guest house expenses, club subscription expenses and cost of services - addition made as expenses were not incurred wholly and exclusively for the purposes of the business of the assessee - HELD THAT:- Assessee could not provide complete details/evidences/invoices/bills etc. of these staff welfare expenses and cost of other services to prove that these expenses were incurred wholly and exclusively for the purposes of the business of the assessee and hence under these circumstances and keeping in view that it is an old litigation with a view to end litigation and being fair to both the rival parties, we allow 50% of staff welfare expenses and cost of other services claimed by the assessee as business expenses , while we affirm disallowance of balance 50% of staff welfare expenses and cost of other services claimed by assessee in return of income filed with Revenue. Club expenses disallowance - We hold this issue in favour of Revenue and hold that club expenses incurred by assessee shall not be allowed as business deduction. Disallowance u/s 35(2AB) - AO disallowed weighted deduction claimed by assessee u/s 35(2AB) of the R D expenditure incurred by assessee, while the learned CIT(A) allowed the claim of the assessee for weighted deduction of R D expenses - HELD THAT:- As per facts emerging from records, the AO has given clear and positive finding that evidences in support of expenses incurred on in-house approved R D facility are not submitted by assessee during the course of assessment proceedings and there is no findings on this issue by learned CIT(A) but we have already held that no deduction u/s 35(2AB) of the 1961 Act can be allowed to assessee on this short ground of non entering into an agreement for cooperation with Secretary, DSIR and for audit of accounts of approved R D facility as held by us in this order and in case if at any stage our above decision is over-ruled by Hon ble Superior Courts on that count, then the matter shall be remitted back to the file of the AO for denovo adjudication for verifying the eligible expenditure spent by assessee on its approved inhouse R D facility for computing weighted deduction u/s 35(2AB) of the 1961 Act , after considering all the evidences/explanations which the assessee may like to rely in its defense and after giving proper and adequate opportunity of being heard to assessee in accordance with principles of natural justice in accordance with law . Disallowance of proportionate interest expenditure on interest free advances made by assessee to its group concerns - as stated by AO to be made out of interest bearing funds and the AO has disallowed proportionate interest expenses as the assessee has failed to prove commercial expediency in granting these interest free advances to group companies - HELD THAT:- The assessee has issued Floating Rate Notes(FRN) to the tune of US $ 120 Million in the year 1996 which were due for repayment/maturity in 2003. These FRN s were denominated in Foreign currency carrying interest and the assessee had incurred interest expenses as well loss on foreign exchange fluctuations on these FRN s. It was also observed by tribunal that said FRN s were issued for financing the import into India of capital goods for its operations and projects in which the assessee is involved and for general corporate purposes permitted by Government of India, which is stated in the offer document issued by assessee. It is also observed that Chennai-tribunal in a decision rendered in assessee s own case [ 2016 (12) TMI 1800 - ITAT CHENNAI] of which one of us being Hon ble Judicial Member was part of Division Bench who pronounced that order) has remitted the matter back to the AO for fresh adjudication as to allowability of proportionate interest expenses with interest free advances made to associated companies - we are of the considered view that the matter is required to be restored to the file of the AO for fresh adjudication de-novo

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• 2019 (12) TMI 1191
  Revision u/s 263 - related parties u/s.40A(2)(b) - HELD THAT:- AO had again issued notice u/s.142(1) of the Income Tax Act dated 03.11.2016 which is at page 24 to 26 and in this respect the reply was also filed by the assessee before the AO which is at page no.20 to 23 and had filed all the replies along with documents and participated into the enquiry proceedings being carried out by the AO. We, further noticed that since the assessee has filed the audited reports containing all the details regarding related parties u/s.40A(2)(b) along with name, PAN, Relations, nature of transactions and payments made. Even otherwise, the assessee has also duly furnished the report from expert in Form 3CEB as required by Law, wherein all the details of payment made related to party were mentioned i.e. name of persons with whom specifically domestic transactions as entered into, description of transaction along with quantitative details if any. Total amounts paid or payable in the transaction as per the books and as computed by the assessee having regard to arm s length price. The method used for determining the arm s length price which also goes to show that there is nothing on the record to suggest that assessee had made any excessive payments to the related parties which has caused loss to the Revenue. Payment of bank guarantee commission and renewal fees - HELD THAT:- With regard to payment of bank guarantee commission and renewal fees is concern, in this regard, we have seen from the record that specific query was raised by the AO and the assessee had submitted ledger account vide letter dated 25.11.2016 and also duly replied to the query vide letter dated 26.12.2016. All those facts goes to show that the AO has applied his mind and after considering the same and has passed the assessment order u/s.143(2) of the Act and hence it cannot be said that this is a case of no enquiry. It is well settled that both the conditions vis- -vis before of AO should be erroneous and assessment was prejudicial to the interest of Revenue and both those conditions should be cumulatively specified by the ld.Pr.CIT. In the present case the matter belongs to A.Y. 2014-15 and the Explanation 2 was inserted in the Act u/s.263 by Finance Act 2015 w.e.f 01.06.2015. Even otherwise, taking into consideration the cumulative facts observed by us in the present case as well as the legal proposition laid down by the higher courts we are of the view that in the present case the AO had made enquiry and assessee has also placed on record all the documents as were required by the AO in respect of both the issues as now raised by the ld.Pr.CIT. Thus, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, the ld. Pr.CIT was not correct in exercise the jurisdiction under section 263 of the Act. In view of these facts and circumstances, we quash the proceedings initiated in the impugned order passed under section 263 of the Act and allow the appeal of the assessee.

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• 2019 (12) TMI 1190
  Penalty u/s. 271C - TDS default - Period of limitation u/s 275 - Competent officer - reasonable cause for non-compliance with the provisions as envisaged u/s.273B - Assessee in default for not deducting tax at source u/s.201(1) and also levying interest on tax not deducted at source from the date on which tax ought to have paid to the credit of the Central Government till the date on which the payments are made u/s. 201(1A) - HELD THAT:- There was actually non-deduction of tax at source by the Assessee but the TDS deducted was given credit only on the basis that the payees have filed their returns of income showing the amounts received from the Assessee and hence the Assessee was given the benefit of TDS deducted to that extent as per the decision of the Hon ble Supreme Court in the case of Hindustan Coco Cola Beverage Pvt.Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] . The plea of the Assessee that failure to deduct tax at source was unintentional and was under the bonafide belief that tax is not deductible on payments in question has to be accepted in the given facts and circumstances of the case. It is also not disputed that the default was noticed only at the time of Survey Proceedings. Taking into consideration the nature of business and small town in which the Assessee carries on business and other circumstances, we are of the view that this is not a fit case for levy of penalty u/s.271-C as the circumstances pointed out above would be reasonable cause for the failure of the Assessee to deduct/short deduct tax at source. We therefore cancel the order imposing penalty u/s.271-C - Decided in favour of assessee.

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• 2019 (12) TMI 1189
  Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- AO has followed the due procedure of law and also had specific information in his possession, received from the DIT(Inv.) which indicated that certain amounts had been received in the form of bogus share capital/premium/loan from Sh. Surinder Kumar Jain who were entry operators. AO has elaborately discussed in the assessment order as to how the amounts received in the form of share capital/share premium etc, had not been properly examined at the time of earlier assessment and also how this information was fresh information and specific in nature, which clearly indicated that there was omission/failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. AO has also relied upon various judicial pronouncements stated in the assessment order to highlight such omission or failure to disclosed fully and truly all material facts what clearly justified reopening of the assessment beyond four years. In the present case there was enough evidence and justification with the AO to reopen the assessment beyond period of four years. It has been widely held by the Courts that it is not necessary to prove beyond doubt that income has escaped assessment and it is sufficient that the AO has recorded his reasons and followed the due procedure of law for reopening of the assessment. In .view of factual matrix of the present case, I do not find any reason to interfere with the findings of the AO that this was a fit case for reopening of the assessment and accordingly the contentions and Grounds of the appellant are dismissed. Addition on account of share capital and share premium - In the factual matrix of the present case, where entries had been taken from paper companies and Credit worthiness of the Parties as well as the genuineness of the transaction had not been discharged by the appellant, there was no justification to accept the contentions of the AR Of the appellant that the additions were not justified. Accordingly, after careful consideration of the facts of the present case, there is no material or submissions provided by the AR of the appellant, which calls for any interference In the decisions of the AO. Accordingly, this addition of Rs. 90 Lacs made by the AO is upheld. These Grounds are therefore dismissed.

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• 2019 (12) TMI 1188
  Disallowance u/s 41(1) - whether merely because assessee has shown the outstanding liability for years and non-furnishing of complete details, cannot be the reason for considering the liability has ceased to exist? - HELD THAT:- Liability has not ceased. The facts remain undisputed by both authorities are that these amounts were debited by the assessee and allowed by the Revenue. We find that the impugned addition was made by the Revenue authorities by doubting existence of these liabilities and that the assessee has not written back and continue to show these liabilities as outstanding in the balance sheet. AO has not brought any evidence on the record to show that liability has ceased. The assessee has not written off the liability in the accounts. Therefore, there would not be any addition under section 41(1) of the Act. Hon ble High Court in the case of Bhogilal Ramjibbhai Atara [ 2014 (2) TMI 794 - GUJARAT HIGH COURT] considered this aspect and observed that even if debt itself is found to be non-genuine from the very inception that also in terms of section 41(1) of the Act, there is no solution for that. In other words, addition cannot be made unless liability in the accounts has been written off. - delete the disallowance - Decided in favour of assessee. Non-granting of set off of unabsorbed depreciation and carry forward of short term capital loss - HELD THAT:- CIT(A) has recorded a finding that no discussion on these issues has been made by the AO, and also the assessee has not made any submission on this ground. CIT(A) has set aside this issue to the file of the AO with direction to verify the records and allow the claim if allowable as per law. We are of the view that no prejudice will be caused to the assessee with this direction of the ld.CIT(A) to the AO, and therefore, no interference is called for on this issue.

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• 2019 (12) TMI 1187
  Penalty u/s 271D - obtaining cash loan in contravention of section 269SS - the cash has been deposited directly in the Bank account of assessee, for which assessee has no control - reasonable cause u/s 273B - HELD THAT:- A.O. merely initiated penalty proceedings separately for violation of Section 269SS of the I.T. Act. He did not record any satisfaction under section 271D of the I.T. Act before initiating the penalty proceedings under section 271D of the I.T. Act. Further, the explanation of assessee on merit clearly suggest that assessee had a reasonable cause for violation to comply with the provisions of Law because no cash given directly to assessee but deposited at Shilong Branch over which assessee did not have any control. The assessee immediately acted on the matter and refunded the amount in question. The finding of fact recorded by Ld. CIT(A) have not been disputed through any evidence or material on record. Therefore, considering the issue in the light of reasonable cause under section 273B of I.T. Act, for failure to comply with the provisions of Law, no penalty is leviable in the matter. Considering the above discussion in the light of judgment of the Hon ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] set aside the orders of the authorities below and cancel the entire penalty. - Decided in favour of assessee.

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• 2019 (12) TMI 1186
  Assessment u/s 153A - Deduction u/s 80IA - HELD THAT:- In this case, there is no dispute that the assessee has filed the return of income on 28.11.2014 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2015. As per the settled law, the AO is not permitted to make the addition u/s 153A in the completed assessments without the support of incriminating material. In the instant case, there was no incriminating material found and the assessee has filed the return of income claiming deduction u/s 80IA. The audit report in Form 10CCB was filed manually. Therefore, addition made by the AO without support of the incriminating material u/s 80IA is unsustainable, accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. Addition u/s 69A - survey u/s 133A was conducted in the business premises of Hira Panna Jewellers - HELD THAT:- Loose sheets were extracted from the computer of Hira panna Jewellers pertaining to the period of April 2014 from 01.04.2014, though it was mentioned as JKS, neither the assessee, nor Shri Mahendra Kumar Jain have accepted that loose papers do belong to them. The assessee bluntly denied and stated that these loose papers did not belong to the assessee. The computer system found during the course of survey belonged to Hira Panna Jewellers, but not belonged to the assessee. As per section 292C of the Act, the loose sheets, books of accounts found during the course of search /survey are presumed to be belonging to the assessee, where the search or survey is conducted. In the instant case, survey was conducted in the business premises of Hira Panna Jewellers. Therefore, as per the presumption u/s 292C, loose sheets pertained to the Hira Panna Jewellers, but not to the assessee. Unless it is established that the loose sheets pertained to the assessee, the AO is not permitted to tax the contents or unexplained money or expenditure recorded in the loose sheets in the hands of the assessee. In the instant case, there was no material placed on record to show that the loose sheets were belonging to the assessee, therefore, the addition made by the AO in the hands of the assessee on account of unexplained money or expenditure is unsustainable. Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. Deduction claimed u/s 80IA - mandation to file the audit report u/s 10CCB electronically - HELD THAT:- As per section 80IA, it is mandatory to file the audit report u/s 10CCB electronically and in the instant case, the assessee has failed to furnish the same. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Appeal of the assessee is dismissed on this ground. Addition of unexplained jewellery - made the value of entire gold jewellery and silver articles as an addition since none of the family members filed the wealth tax returns or disclosed the same in the return of income - CIT(A) allowed 50% of jewellery as explained keeping in view the Board Circular and confirmed the balance addition - HELD THAT:- Since the assessee s family consists of the assessee, his wife, daughter and son, the assessee is entitled for credit of 950 gms and the balance to be brought to tax. In the assessee s case, gold jewellery ornaments found was only 792.50 gms., the entire jewellery is treated as explained and no addition is called for. However, we confirm the addition relating to the silver articles found during the course of search. Accordingly, appeal of the assessee is partly allowed. Levy of interest u/s 234A, 234B and 234C is mandatory - We direct the AO to levy the interest correctly as provided u/s 234A, 234B and 234C of the Act.

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• 2019 (12) TMI 1185
  Loss suffered by the assessee in the derivatives disallowed - HELD THAT:- Since the assessee has furnished all the documents along with bank transaction details, therefore, it cannot be held that primary onus cast upon the assessee has not be discharged. However, at the same time the broker who has carried out such a transaction could not corroborate or confirm the transaction as the notice sent to the broker came back unserved. Thus, the explanation and the evidences submitted by the assessee could not be substantiated. Under these facts and circumstances, we are of the opinion that this issue should be remanded back to the Assessing Officer to re-examine the claim of loss afresh and assessee is directed to substantiate its case and provide not only the confirmation from the broker but also the correct address of the broker and the Assessing Officer would be at liberty to carry out any necessary inquiry as he deem fit to verify the genuineness of the transaction. The assessee shall cooperate with the inquiry as may be asked upon by the Assessing Officer - Ground raised by the assessee is allowed for statistical purposes Addition u/s 68 - Unesecured cash credits - HELD THAT:- Such stress has been given by the ld. DR and also adverse inference has been drawn by the Assessing Officer that in the subsequent year the sister concern of the assessee has bought back the shares at Rs. 5/- in order to hold that the transaction during the year is bogus or non-genuine. First of all, under the deeming provision what is required to be seen whether the credit appearing in the books of account during the financial year, the assessee has been able to discharge the onus regarding the nature and source of credit or not. Here in this case, the nature of credit is share application money and the source has found to be satisfactorily explained by the assessee as held by Ld. CIT (A). Thus, the onus cast upon the assessee has been fully discharged. Secondly, if a share at a face value of Rs. 10/- and premium of Rs. 90/- has been bought back at Rs. 5/- then Assessing Officer has all the powers under the Act to examine the issue in the year in which transaction has taken place and there he can draw any inference after proper scrutiny and inquiry. So far as this year is concerned, we have to see the genuineness of the transaction of the share application money received during the year. Accordingly, the grounds raised by the Revenue stands dismissed.

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• 2019 (12) TMI 1184
  TDS u/s 194C - composite / turnkey contract including supply of labour and services with supply of material - Non-deduction of TDS on supply of materials treating the assessee as assessee-in-default as per Section 201(1)/201(1A) - HELD THAT:- Award of separate contracts shall not in any way dilute the responsibility for successful competition of the facilities, achieving the guaranteed performance of the erection/installation, proper O M of the erection/installation after final acceptance by the corporation, etc as per the tender specification and a breach in one contract shall automatically be construed as a breach of the other contracts which will confer a right on the corporation to terminate other contracts also at the risk and the cost of the supplier. Regarding the closure of projects, the contract mentioned the following clause. Closure proposal will be prepared by the contractor after completion of the project or as per decision of NBPDCL for closure of the project. The details of supplied materials and works executed as per the contract will be prepared by the contractors and reconciled with the engineer to his satisfaction. Therefore, the CIT(A) observed that the two contracts are of the nature of a composite package and that they are inseparable. Both contracts serve the purpose of rendering one single service. The scope of the contract includes design, engineering, manufacture, type testing, and training of power grid personnel and supply of, goods. Further, as per the conditions of the supply of contract, the contract price is inclusive of all customs duties, levies, excise duty, sales-tax and other duties payable on equipments, components, sub-assemblies and, raw materials or any other items used and it is clearly mentioned that no separate claim on these duties will be entertained by the contractee. These are essential elements of a composite contract and therefore the CIT(A) held that the two contracts of supply and erection, shall be taken as composite contract. As relying on M/S SAHARA INDIA COMMERCIAL CORPN. LTD. ALIGANJ LUCKNOW [ 2017 (1) TMI 1681 - ALLAHABAD HIGH COURT] we remit the issue to the file of AO for verification and adjudication of the issue after affording an opportunity of being heard to the assessee as per the observations made by the Hon ble High Court supra. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201(1A) of the Act on the present assessees. In case of found otherwise, the charge of interest u/s.201(1A) is liable to be paid by the appellant/assessees.

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• 2019 (12) TMI 1183
  Addition u/s.145A - method of accounting followed - HELD THAT:- After going through the Audit Report that assessee has already considered the application of section 145A in the audit report and the practice of showing the working of inclusion of cess and excise duty on the purchases, sales and the stock is being followed by the assessee company since last several years. Section 145A requires the valuation of purchase and sale of goods or services and of the inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever have been called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on date of valuation. In our considered opinion, assessee is following the same method for several years and therefore this ground of Revenue is dismissed. Deduction u/s. 10A - if the claim of deduction u/s. 10B is disallowed as assessee unit is included in the business of trading of Computers, Computer Peripherals, software development etc. and was granted license setting up 100% EOU under STP scheme as per letter of permission - HELD THAT:- Assessee has also filed copy of letter from STPI, Gandhinagar, Gujarat and assessee is reflecting on the website of Department of Electronics Information Technology and assessee has also filed the copy of extract of the said website and which has not been disputed by the ld. A.O. and in the past, assessee has been claiming deduction u/s. 10A. Moreover, assessee company set up in the 100% EOU under STP Scheme as per letter of permission No. STPIG/EXIM/S/503/STTL-SWED/13 dated 2-1-2007 by the Designated officer Software and IT enabled services and same details were submitted before the lower authorities. The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue. Allowing of foreign exchange gain in the claim of deduction u/s 10A - A.O. held that income due to foreign exchange gain are not eligible for deduction - HELD THAT:- Since already we have confirmed the order of the ld. CIT(A) for granting relief to the assessee u/s 10A of the Act. We draw support in favour of assessee from the latest judgment of Hon ble Madras High Court in the matter of CIT Chennai- III vs Pentasoft Technologies Ltd. [ 2019 (9) TMI 155 - MADRAS HIGH COURT] wherein similar claim of the assessee was allowed by the Hon ble Madras High Court. In the matter of Nuwave Esolutions Pvt. Ltd. vs. CIT (Delhi) [ 2018 (12) TMI 1752 - ITAT DELHI] has also granted relief to the assessee and granted deduction in foreign exchange gain. Therefore, in our considered opinion, assessee is eligible for exemption u/s. 10B of the Act and we do not find any reason to interfere in the order passed by the ld. CIT(A). - Decided against revenue.

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• 2019 (12) TMI 1182
  Penalty u/s 271C - Payment to Doctors - Employer / Employee relationship or not - failure to deduct tax at source u/s 192 of the Act when making payments during the relevant year to the consultant doctors as against u/sn 194J - HELD THAT:- Assessee placed before us Form 26A issued by accountant of assessee, in respect of payment made by assessee to these alleged nine doctors. As additional evidence in respect of these nine doctors which in our considered opinion, deserves to be admitted and requires due verification also. We therefore admit additional evidences filed by Ld.AR at this stage. In our opinion, Ld.AO will have to verify all these details to ascertain true facts. We direct Ld.AO to call for all necessary information/details in respect of these nine doctors, the letter of appointment issued by assessee and returns filed by these doctors. AO that in the event, it is found that these doctors were providing professional services to assessee which satisfies requirement of a visiting doctor, undoubtedly, it cannot be held that relationship between assessee and the concerned doctors were that of employee-employer and no demand could be raised under section 201(1) and 201(1A) of the Act. On the contrary, if there exist employee-employer relationship, the benefit may be granted to assessee upon verifying the additional evidence filed, which we have already admitted in preceding paras. Set aside appeals challenging demand raised under section 201(1) and 201(1A) of the Act, back to Ld.AO for de novo assessment. As we have set aside additions back to Ld.AO for verification on de novo basis, penalty levied under section 271C will not survive. However, the AO is at liberty to initiate penalty proceedings u/s 271C of the IT Act, 1961 in the set aside proceedings, if desired so.

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• 2019 (12) TMI 1181
  Registration u/s 12AA - advancement of any other object of general public utility - Charitable activity u/s 2(15) - activity of providing training in various fields to various persons and the objects also includes preservation of environment, yoga, medical relief and relief of poor. - HELD THAT:- On a perusal of various objects mentioned in the trust deed we agree with the contentions of the ld DR that the assessee has included various type of objects in the object clause. Even though the assessee has shown certain photographs which are placed in the paper book, the same will not prove that the assessee is engaged in the educational activities or any other specific activities as claimed by it. No other material was placed before us in order to compel us to interfere with the order passed by ld CIT(E). Under the set of facts we have no other option but to confirm the order passed by ld CIT(E) - Decided against assessee.

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• 2019 (12) TMI 1180
  Claim of exemption u/s 44A - mutual concern - for the benefit of members - profit motive - the activities is to get quality grocery, clothes, stationery and durable items at a very reasonable rate to the employees of Ordanance Factory - HELD THAT:- Members of the society are employees of the Ordnance Factory, Ambarnath and they become members by subscribing to the share capital of the Society; the Managing Committee of the Stores effects purchases of various goods from the manufacturers/wholesellers at competitive price and sales are effected to members only, either on cash or on credit basis ; credit sales proceeds are recovered from members through their employer i.e. Ordnance Factory and its allied establishment, Ambarnath from salaries. Thus it is observed by us that the object is not to earn profit but to provide best possible consumer goods at best price to its members only. It is a case of mutual entity running on principles of mutuality. The essence of mutuality lies in the return for what one has contributed to a common fund. The fund should fulfill the essential requirements that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus should be contributors to the common fund. There must be complete identity between the contributors to the fund and the participators in the surplus. We hold that the essence of mutuality has been established by the appellant. Therefore, we are inclined to set aside the order of the Ld. CIT(A).- Decided in favour of assessee. Deduction u/s 80P(2)(d) in respect of interest earned on fixed deposits - AO allowed net interest deduction after deducting proportionate expenses for earning such interest income received from another Co-operative Bank - HELD THAT:- As evident from the accounts, the appellant is not enjoying any credit facilities from any financial institution. In order to develop the habit of savings, the appellant is collecting thrift deposit from salaries on monthly basis since its inception and these funds are utilized for the business purpose of the appellant. During the year under consideration, the appellant invested Rs. 11,05,000/- out of interest income and surplus in the fixed deposits against various funds. There is no merit in the action of the AO to disallow the expenses @ 87.54%. Also there is no merit in the order of the CIT(A) in restricting it to 50%. It is well settled that section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the Co-operative Societies from its investment with any other Co-operative Society. Having regard to the above provisions, we are of the considered view that there is no basis to restrict the disallowance to 50% as held by the Ld. CIT(A). The apportioning of the expenditure to the interest income is not justified and the appellant is entitled to deduction u/s 80P(2)(d) of the entire interest of Rs. 7,70,784/-. The order of the Ld. CIT(A) therefore reserves to be set aside.- Decided in favour of assessee.

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• 2019 (12) TMI 1179
  Addition u/s. 28(iv) - share transactions - whether the amount of premium paid by the Telenor Group for acquiring the shares of 8 UW companies can be held to be in the form of any benefit or perquisite arising from the business of assessee u/s 28(iv) ? - HELD THAT:- Here, the assessee company had purchased 3.54 crore shares at Rs. 10/- per share from M/s. Unitech Ltd. of 8 telecom companies for an aggregate consideration of Rs. 34.50 crores under share purchase agreement dated 25.10.2008 and any subsequent allotment by such 8 telecom companies independently to Telenor at Rs. 179 per share cannot be the basis to hold that there is any benefit or perquisite arising from business carried on by the assessee company. In a worst case scenario if there is any benefit the same benefit would be of M/s. Unitech Ltd. which held the shares of 8 telecom companies from whom the three companies have purchased the shares. It would be also relevant to mention that Ld. CIT (A) in one of the assessee company which is also impugned before us, i.e., M/s Acorus Unitech Wireless Pvt. Ltd.,that the benefit if at all in these transactions actually accrued to Unitech Ltd. and to favour Sri Ramesh Chandra and Sri Sanjay Chandra the actual beneficiaries and not to the assessee company. This itself goes to support the contention of the Ld. Counsel that no benefit or perquisite arose in the hands of the assessee companies. The judgments relied upon by the ld. DR which has also been referred in the impugned order in no manner will apply on the facts of the present case because most of them pertained to waiver of a loan or unclaimed credit balance returned back to the P L account taken during the course of business. Thus, these judgments do not help the case of the Revenue at all. Accordingly, the additions made by the Assessing Officer and sustained by the Ld. CIT (A) u/s. 28(iv) are directed to be deleted.

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• 2019 (12) TMI 1178
  Disallowance u/s 14A - investments which yielded exempt income - HELD THAT:- Considering the fact that the lower authority has considered all investments made by assessee for calculating average investment for disallowance u/r 8D(2)(iii), the Special Bench of Delhi Tribunal in Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI ] held that only those investments which yielded exempt income should be considered for disallowance u/r 8D(2)(iii), we restore this part of ground to the file of AO to make fresh computation of average investments by taking into consideration only those investments which yielded the exempt income. Disallowance u/r 8D(2)(ii) - assessee vehemently argued that the disallowance in respect of net interest has to be made by taking into consideration only 3 investments which yielded dividend income during the year. We have noted that the assessee has raised this plea, for the first time before us and has strongly relied upon the decision of Mumbai Tribunal in Sajjan India Ltd vs ACIT [ 2017 (12) TMI 47 - ITAT MUMBAI ] wherein it was held that mandate of Act is to tax real income and tax can only be levied under authority of law. Even if disallowance fall below disallowance u/s 14A offered by assessee in the return of income, revenue cannot charge tax on income, which never was income of assessee chargeable to tax. Therefore, we deem it appropriate to restore this part of disallowance u/r 8D(2)(ii) to the file of the AO to examine the issue afresh in the light of above referred decision and pass the order afresh in accordance with law. Disallowance u/s 56(2)(viia) - AO treated the investment in shares as income under section 56(2) (viia) - HELD THAT:- We have noted that the assessing officer during the assessment not provided the valuation (FMV) arrived by him to the assessee. During the first appellate stage the assessee furnished the working of the FMV of the shares of these two entities, however, the AO despite granting opportunity to file his remand report, not controverted the said valuation. The valuation furnished by the assessee is in accordance with Rule 11UA is also not disputed by AO. The values of shares as per valuation furnished by assessee are less than the consideration paid by the assessee for acquisition of shares. The ld. DR for the revenue failed to bring any fact or evidence to our notice to take other view. Thus, we do not find any infirmity in the order passed by ld. CIT (A) in deleting the addition qua the acquisition of shares of Shivalik Solid Waste management and Coimbatore Integrated Waste Management Pvt Ltd., which we affirm. In the result ground No.2 in revenue s appeal is dismissed. Addition in respect of purchase of shares of ETL - CIT(A) sustained the addition of difference of FMV as per Rule 11UA. The ld. AR for the assessee vehemently argued that ETL is a closely held company and its shares are not readily available in the market for sale or trading and that the sale by Sidhi Samrat Dychem Pvt Ltd was a mode of exit from the agreement due to certain financial difficulties faced by Sidhi Samrat Dychem Pvt Ltd. No such evidence in the form of correspondence or any communication is brought on record by the assessee that Sidhi Samrat Dychem Pvt Ltd was facing financial difficulties, which may justify the action/ transaction with assessee. Hence, we do not find merit in the submissions of the ld. AR for the assessee. Alternative submission of the ld AR for the assessee that provisions of section 56(viia) are anti abuse and intended to prevent the practice or receiving property without consideration or for inadequate consideration, are concerned, the ld AR has strongly relied on the Circular No. 01/2011 dated 6th April 2011 issued by Central Board of Direct Tax (CBDT) and the decision of Tribunal in ACIT Vs Subhodh Menon ( supra ). The throughout the proceedings took the stand that the assessee that the transaction with ETL is bonafide transaction. We are also of the view that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. As we have already noted that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. The assessing officer has not made any investigation from ETL nor brought any adverse material on record against the assessee. Hence, we accept this submission of the ld. AR for the assessee and allow the ground of appeal raised by the assessee.

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• 2019 (12) TMI 1177
  Capital gain on property inherited - Exemptions u/s 54F and 54B - inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956 - AO considering the property as HUF property of the respective assessee - HELD THAT:- We find that undoubtedly the land in question was inherited by the assessee and his family members on the death of their predecessor. In the case of Yudhishter Vs. Ashok Kumar [ 1986 (12) TMI 380 - SUPREME COURT] has clearly held that after Hindu Succession Act, 1956, when the son inherited the property in the situation contemplated by section 8, he does not take it as Kartha of his own undivided family, but takes it in his individual capacity. In the case of Uttam Vs. Saughag singh Ors [ 2016 (3) TMI 1369 - SUPREME COURT] the Hon ble Supreme Court has held that the share of the Hindu male coparcener is governed by the proviso to section 6 of Hindu Succession Act and a partition is effected by operation of law immediately before his death and in this partition, all the coparceners and the Hindu Male s widow get a share in the joint family property. On the application of section 8 of the Act, it was held that such property would devolve only by intestacy and not survivorship. It was also held that after the joint family property has been distributed in accordance with section 8 on the principles of intestacy, the joint family property ceases to be joint family property in the hands of the various persons who have succeeded to it as they hold the property as tenants in common and not as joint tenants. Thus, the above decisions of the Hon ble Supreme Court on the inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956, hold that on the death of the Hindu Male, the property devolves on the heirs in their individual capacity and ceases to be the HUF property. Respectfully following said decision, we hold that the property inherited by the respective assessees is their individual property and, therefore, the capital gains, if any, is exigible to tax in their individual hands alone. Whether the said property is a capital asset u/s 2(14) - It is not required to be adjudicated at this stage as it has already been decided by the coordinate bench of this Tribunal in the assessee s case in the earlier round of litigation that it is a capital asset u/s 2(14) of the IT Act. Thus, the grounds of appeal on this issue in the case of all the assessee s are rejected. Claim of deduction u/s 54B - We find that the AO and CIT(A) have not really examined the allowability of such claim by holding the assessee to be an HUF and held that deduction u/s 54B is allowable only in the case of individuals. Further, with regard to the claim of deduction u/s 54F also, the AO has not gone into the details of the investment made in the residential property and whether the conditions of section 54F are fulfilled by the respective assessees. Therefore, we are of the view that the grounds of appeal on the issue of deduction under sections 54F and 54B needs reconsideration afresh by the AO. Therefore, they are set aside to the file of the AO and the grounds are treated as allowed for statistical purposes. Expenditures claimed as incurred towards sale of their land, the assessees have not been able to provide any evidence in support of such claim and, therefore, disallowance of such claim is confirmed in each of the cases. All the appeals of the assessees are treated as partly allowed and only as regards the claim u/s 54F 54B they are are set aside to the file of the AO.

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• 2019 (12) TMI 1176
  Revision u/s 263 - AO has failed to make inquiries and apply her mind with regard to the applicability of the provisions of section 43CA - HELD THAT:- In the instant case, AO had primarily changed the head of income from business to that of long term capital gains for the reason that the assessee was trying to avoid provisions of section 50C. Provisions section 50C applies with regard to the transfer of long term capital asset, whereas section 43CA applies to transfer of asset (other than capital asset). Therefore, if the transfer of asset is to be assessed under the head `income from business necessarily, the provisions of section 43CA would have application and the value of asset for the purpose of stamp duty valuation under the State Government laws would deemed to be the consideration received on account of transfer of such business asset. AO had failed to take note of the provisions of section 43CA and the impact of such section in the instant case. As mentioned earlier, the assessee has already filed an appeal as against the assessment order holding the transfer of land would be assessable as income from long term capital asset. In context of the appeal filed by the assessee, the application of section 43CA assumes significance. AO having failed to take notice of section 43CA while framing the assessment order, would render the assessment order erroneous and prejudicial to the interest of the revenue in view of Explanation (2) clause (a) of section 263. Therefore, since the AO has failed to cause any inquiry in this regard nor examined the impact of section 43CA we are of the view that the CIT has correctly invoked his revisionary jurisdiction u/s 263 and set aside the assessment order dated 26.12.2016. - Decided against assessee.

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• 2019 (12) TMI 1175
  Reopening of assessment - jurisdiction and authority of the Assessing Officer who passed reassessment order under section 143(3) read with section 147 - whether the learned Joint Commissioner of Income-tax who passed the reassessment order dated March 20, 2015 is vested with jurisdiction and authority to pass such order in absence of proper order under section 120(4)(b)? - HELD THAT:- Revenue has failed to file any order passed by the Principal Chief Commissioner of Income-tax/Chief Commissioner of Income-tax/Principal Commissioner of Income-tax, under section 120(4)(b), authorising the Joint Commissioner of Income-tax to act as an Assessing Officer in the case of the assessee. We further noted that although the Revenue filed copy of the Board s general notification authorising Joint Commissioner of Income-tax/ Additional Commissioner of Income-tax to act as an Assessing Officer, but failed to file the order of the Principal Commissioner of Income-tax under section 120(4)(b) of the Act, empowering the Joint Commissioner of Income-tax to act as an Assessing Officer. We further noted that although, the Revenue has filed order of the Principal Commissioner of Income-tax-17, Mumbai passed under section 120(1) and (2) of the Act, but said order is not under section 120(4)(b) of the Act. Therefore, we are of the considered view that the reassessment order passed by the Joint Commissioner of Income-tax-Range17, Mumbai is void ab initio and liable to be quashed, because, the Assessing Officer who had passed reassessment order does not had valid jurisdiction and authority to pass such order, in absence of proper order in writing under section 120(4)(b) of the Income-tax Act, 1961. Reassessment order passed by the Joint Commissioner of Income-tax, Range-17, Mumbai is void ab initio and liable to be quashed, because the Assessing Officer who had passed the assessment order does not possesses valid authority and jurisdiction to pass such order in absence of separate order under section 120(4)(b) of the Act. Case followed M/S. TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.,) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 (3) , MUMBAI AND VICE-VERSA [ 2019 (8) TMI 1446 - ITAT MUMBAI] - Decided in favour of assessee.

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• Customs

• 2019 (12) TMI 1174
  Principles of natural justice - Inquiry proceedings against Air Cargo Customs Clearing Agent - Mandamus sought directing the respondents not to harass the Petitioner in the guise of enquiry either by personal appearance or search warrant or interfering in the day-to-day business of the Petitioner - HELD THAT:- The search of the Head of the Office of the Petitioner-company personally, is challenged. The action on the part of the respondents is quite natural and incidental. Hence, the Petitioner cannot preclude the officials of the respondents from proceeding with their official duty. It is also to be stated that the officials of the respondents also cannot exceed their limit, in the guise of enquiry, by violating the human rights. The respondents have given an undertaking that the Petitioner will not be harassed in the guise of enquiry and investigation, the respondents are directed to conclude the enquiry with the Petitioner and their staff members within a period of one month from the date of receipt of a copy of this order - Petition disposed off.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 1173
  Approval of the Resolution Plan - extension of time period for legal proceedings - invitation for EoI - filing of the Resolution Plan by the Resolution Applicant - Section 30(6) of I B Code, 2016 - Since the Resolution Plan submitted by the successful Resolution Applicant scored more value, the same was placed before the COC for voting which was ultimately approved by the COC and voted with approval of 81.39% of share and now the Resolution Plan placed for consideration. HELD THAT:- It is a settled law that the Financial Creditors and the Operational Creditors cannot be treated on the same footing and moreover, the principle of equality cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code. It is time and again reiterated by the Hon ble Supreme Court that so long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors and hence the objections made by the Applicants are not sustainable A conjoint reading of Section 25(2)(h) of the IBC, 2016 with Regulation 36A (10), (11) and (12) would posit the fact that objections to inclusion or exclusion of a prospective resolution applicant in the provisional list referred to in sub-regulation (10) can be made with supporting documents within five days from the date of issue of the provisional list - In the present case, the intended prospective resolution applicant viz. Sai Trading and Interiors has expressed their interest by way of an email to the Resolution Professional on 17.04.2019 and his name was included in the provisional list of resolution applicant released by the Resolution Professional on 23.04.2019, however his name was left out from the final list of prospective resolution applicant released by the Resolution Professional on 28.04.2019. A perusal of the minutes of the 8th COC reveals the fact that exclusion of M/S. Sai Trading and Interiors from the prospective list of resolution applicant was deliberated upon by the COC in its 8th COC meeting dated 28.04.2019 and the COC and the Home buyers had serious doubts as to the capability, competence, quality, bonafide and financial soundness of M/S. Sai Trading and Interiors and upon detailed discussions made thereunder, it was finally resolved to exclude M/S. Sai Trading and Interiors from the prospective list of resolution applicant and moreover, as per Regulation 36A (11) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the COC is empowered to include or exclude any person from the prospective resolution applicant. The person challenging the Resolution Plan is not even an unsuccessful Resolution Applicant but only an intended prospective resolution applicant, whose name has been left out from the final list of resolution applicants, M/S. Sai Traders and Interiors has no vested right that his resolution plan ought to have been considered by the COC and no challenge can be preferred thereof before this Adjudicating Authority. The Resolution Plan is hereby approved and is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 of IBC, 2016 shall not have any effect henceforth - application disposed off.

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• Service Tax

• 2019 (12) TMI 1172
  Demand of service tax - Rent a Cab Service - Business Support Service - evasion of service tax - suppression of facts - extended period of limitation. Rent-a-cab operator service - HELD THAT:- The demand sustainable on merits - As regard the limitation, the question answered in negation and in favour of the assessee. Business Support services - HELD THAT:- Under clause (104C) the definition starts with the words Services Provided in relation to business or commerce and thereafter in the inclusion clause same names of the services are provided. Aas per the clear definition, the services primarily should have a support service in relation to business /commerce - In the present case the appellant have provided the support service of providing driver, cleaner and maintenance of buses which are owned by the company M/s. Welspun. There is no doubt or dispute that M/s welspun is an exclusive commercial organization and carrying out their manufacturing and sales activity in the factory where the appellant have provided the services, therefore, the services provided by the appellant is undoubtedly in relation to business or commerce - it is not necessary that only those support service which are identical or similar to the services under the inclusion clause will fall under business support service. The services mentioned in the definition as inclusive are some of the services apart from all the services which are provided in relation to business or commerce. The services provided by the appellant to M/s. Welspun who have used this service undisputedly in relation to their business or commerce and will fall under support services of business or commerce - the demand under business support service was rightly invoked by the revenue. Time limitation - HELD THAT:- Since there was no ambiguity as regard taxability of appellant service under the head of Business Support Service, non-payment of service tax without informing to the department is clearly under suppression of fact on the part of the appellant, therefore, the demand for extended period is rightly invoked by the Adjudicating Authority and the First Appellate Authority. Penalty u/s 76 and 78 - HELD THAT:- Simultaneous penalty under section 76 and 78 cannot be imposed as held by Hon ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] , therefore, the penalty imposed under section 76 is set aside - Other penalties and interests to the extent demand was sustained is imposable. Appeal allowed in part.

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• 2019 (12) TMI 1171
  Recovery of CENVAT credit - input services - allegation that input services were not utilized by the assessee but utilised for the broadcasting of channels by the overseas entity - penalties u/s 78A of Finance Act, 1994 - exported services or not - exclusion from the definition of input service in rule 2(l) of CENVAT Credit Rules 2004 or not - insistence on the part of Revenue that the responsibility for discharge of tax liability is distinct from provision of service which alone entitles availment of CENVAT credit. HELD THAT:- It is not disputed that the appellant-assessee has discharged tax liability but it has been held that such compliance is as a mere agent who does not consume the input service ; implicit in this hypothesis is that even the procurement of service is as an agent even though Learned Authorized Representative is unable to draw sustenance for deeming such agency in the taxing statute or in the CENVAT Credit Rules, 2004. It is not the entitlement of the broadcaster within the scheme of CENVAT credit that is objected to but the claim of the appellant-assessee to that entitlement as surrogate of provider of service - There is no allegation that the disputed services are not input services for a broadcaster and, hence, the exclusions or the schedule, for which that definition is intended, are not relevant for deciding on eligibility in the dispute before us. The perception conflict between surrogacy and agency seems to be the genesis of the controversy; while the appellant-assessee claims to be the surrogate, Revenue is prepared only to concede status of agency for discharge of liability and, that too, as a legal fiction which excludes categorization as broadcaster. The levy on manufacture is crystallised on the product without having to take recourse to manufacturer making abundantly clear, by implication, that the manufacturer pays the duty and takes eligible credit. Likewise, in section 66 of Finance Act, 1994, there is no reference to any person but only to the taxable events described in section 65(105), and in the successor section 65B, even less so. The complexity of definition of taxable activity, necessitating human presence, is now sought to be superimposed on the CENVAT credit scheme which recognises only the taxpayer within its ambit. The deployment of expressions in CENVAT Credit Rules, 2004 warrants recourse to Finance Act, 1994 only for interpreting expressions that are not defined therein. As the said Rules do not allude to taxable service except with the qualification provider of , and is defined in rule 2(q) and rule 2(r) as a composite expression, which is not untrammeled, even the parent statute may be unable to afford an interpretation. By inclusive qualification, rule 2(r) of CENVAT Credit Rules, 2004 brings person liable to pay tax within its ambit - The levies devolve on the person liable to tax as laid out in the Service Tax Rules, 1994 and, in view of rule 9 of CENVAT Credit Rules, 2004, credit can be taken only by the entity burdened with the incidence of tax. That is the sole criteria of eligibility to take credit and not the process by which broadcast signals are received in India. The relationship between the overseas entity and the appellant-assessee is open and declared and the tax law sought to be invoked against the latter is not premised on the existence of a relationship between the two. The laudable morality that guided the widening of investigative jurisdiction cannot be read out of context to impute an allegation that is not acknowledged in the law pertaining to levy of service tax. In the light of findings that the appellant-assessee is not only de facto but also de jure provider of output service as well as consumer of the impugned input service , the recovery ordered in the impugned order as well as the penalties on the appellant-assessee and the individual appellants is set aside - appeal allowed - decided in favor of assessee.

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• 2019 (12) TMI 1170
  Classification of services - works contract services or not - agreement/ sale deed for sale of undivided portion of the land together with the semi finished portion of the flat - agreement for construction with their customers after sale - HELD THAT:- There is no dispute that the show cause notice demanded service tax only on the amounts received after sale has been completed. Therefore, the amounts received towards sale deed were supposed not to have been included in the demand. However, prima facie, looking at the annexure to the SCN and the table presented before us by the learned CA as well as the reply to RTI query received by him, it does appear that sale deed value has been included while computing the demand and confirming it. Since the dispute is only regarding the computation of the demand and not on any specific point of law, it is a fit case to be remanded to the original authority to recalculate the demand after excluding the sale deed value - appeal allowed by way of remand.

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• 2019 (12) TMI 1169
  Sub-contract - liability of sub-contractor to pay service tax - main contractor sub contracted part of the work to the appellant, who rendered the services and did not pay any service tax by writing on the invoices that service tax is exempted as per N/N. 25/2012 ST dated 20.06.2012 - HELD THAT:- The services provided by the assessee were part of the main contract awarded by the State Government to the principles contractor. Further Commissioner (Appeals) has relied upon the instructions issued by the board itself laying down that in such a scenario no tax liability would fall upon the sub-contractor. There are no infirmity in the order of Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• Central Excise

• 2019 (12) TMI 1167
  Maintainability of petition - appealable order or not - Section 35B of the Central Excise Act, 1944 and Section 129A of the Customs Act, 1962 - HELD THAT:- As other Writ Petitions have also been dismissed, the petitioner does have an equally efficacious alternative remedy, the admission is declined with liberty to the petitioner to avail the remedy available under the law.

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• 2019 (12) TMI 1166
  Maintainability of appeal - appropriate forum - Section 35G read with section 35L(iii)(b) of the Central Excise Act - Extended period of limitation - Section 11A(1) of the Central Excise Act - suppression of value or not - HELD THAT:- The present appeal filed by the Assessee in this Court is not maintainable before this Court but as per the provisions of Sections 35G and 35L of the Act, the said appeal would lie only before the Hon ble Supreme Court, as the matter pertains to valuation of goods in question. The Assessee on merits of the case may contend that the requirement of affixing MRP would arise only when the actual sales takes place. But that question necessarily depends upon the valuation adopted by the Assessee for the said purpose: whether valuation would be adopted as per CAS-4 Costing Method , which is cost of manufacturing + 10%, or valuation as per Section 4A, which is MRP affixed as per the requirement of the Legal Meterology Act. Therefore, this contention of the Assessee on the merits of the case is a ground of appeal which can be raised before the Hon ble Supreme Court - The objection raised by the Revenue before us is valid and well founded and we agree that the appeal is maintainable only before the Hon ble Supreme Court as per the relevant provisions of the Act. Present appeal is dismissed as not maintainable before this Court, with liberty to the Assessee to prefer such appeal before the Hon ble Supreme Court of India.

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• 2019 (12) TMI 1165
  Principles of natural justice - Demand of interest - credit availed stands reversed, without utilization - both sides submits that no detailed discussion of the judgments cited by them in the subject case nor has the later amendment of law in this regard been discussed by the learned Tribunal - HELD THAT:- We are inclined to set aside the order of the learned Tribunal with a direction to the Tribunal to pass a detailed and speaking order, on merits and in accordance with law, after hearing both the sides. Appeal allowed by way of remand.

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• 2019 (12) TMI 1164
  Permission for withdrawal of appeal - Declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Taking note of the fact that the appellant has filed declaration under the said scheme, the appeal is dismissed as withdrawn with liberty for the appellant to approach the Tribunal to restore the appeal in case discharge certificate is not issue for the dispute pertaining to this appeal. Appeal dismissed as withdrawn.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 1168
  Levy of tax as well as penalty - sale of third Doubling machine taking place - alleged suppressed turnover - HELD THAT:- The learned Authorities below have erred in imposing the tax on the alleged suppressed taxable turnover of the third machine on the basis of a Proforma Invoice claimed to have been raised by the Assessee on the Purchasing Dealer M/s.Anand Cotspin Limited. The said Slip No.4 produced in the course of survey does not refer to any final Invoice, but the fact remains that the Assessee has produced the said explanation before the Assessing Authority as well as Statement of Account of said purchasing dealer independently before the Income Tax Authority of the Purchasing Dealer M/s.Anand Cotspin Limited under section 133(6) of the Income Tax Act giving the third sale under the Invoice No.3 dated 29.06.1996. Merely because the Proforma Invoice shown in the Slip No.4 could not be produced by the Assessee before the Assessing Authority and the same, in our opinion, could not be treated as suppressed sale taxable turnover in the hands of the Assessee. The Assessee had entered into a series of sale of Doubling machines to the same Company viz., M/s.Anand Cotspin Limited and two Invoices were duly recorded for in the assessment period in question for the year 1995-96 and the third sale took place under Invoice No.3 dated 29.06.1996. The Proforma Invoice included in the Slip No.4 was neither serially numbered nor any date has been mentioned and therefore, merely on the basis of mention of the Proforma Invoice in the said statement, the Assessing Authority could not have imposed tax on the same as suppressed sale - merely on the alleged failure to produce the said Proforma Invoice as indicated in Slip No.4, the authorities below cold not have arrived at the conclusion of a suppressed taxable turnover in the hands of the Assessee during the year 1995-96. The third machinery was admittedly sold by the Assessee in the next year 1996-97 under Invoice No.3 dated 29.06.1996 which has been accounted for in the next year and there is no dispute on that issue. All the three authorities below have erred concurrently in holding that the Assessee had suppressed a turnover to the extent of Rs. 6,44,118/- on the basis of the alleged Proforma Invoice not produced by the Assessee - Petition allowed - decided in favor of petitioner.

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