Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 5, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of tax on lotteries - Valuation - when prize paid by the distributor/agent is not contemplated to be excluded from the value of taxable supply, we are not persuaded to accept the submission of the petitioner that prize money should be excluded for computing the taxable value of supply the prize money should be excluded. - while determining the taxable value of supply the prize money is not to be excluded for the purpose of levy of GST - SC
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Levy of tax on lotteries - we do not accept the submission of the petitioner that there is any hostile discrimination in taxing the lottery, betting and gambling and not taxing other actionable claims. The rationale to tax the aforesaid is easily comprehensible as noted above. Hence, we do not find any violation of Article 14 in Item No. 6 of Schedule III of the Act, 2017. - SC
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Levy of tax on lotteries - the inclusion of actionable claim in definition “goods” as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is not contrary to the legal meaning of goods and is neither illegal nor unconstitutional - also, lottery is an actionable claim as proposition of law. - SC
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Service of copy of order u/s 169 - Confiscation of goods alongwith vehicle - goods were not accompanied by the requisite E-way Bill-01 - s per section 169 of UPGST Act, it is clear that service on the driver would not fall within any of the category specified from the Clause a to f of Section 169 (1) of the Act. - The order impugned in the present writ petition is wholly arbitrary, illegal and contrary to the mandate of Section 169 of the Act - HC
Income Tax
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TP adjustment - Recharacterising the compulsorily convertible debentures (`CCDs') as equity shares - till the date of conversion, for allowability of interest u/s 36 (1) (iii) of Income tax Act also, such CCDs are to be considered as Debt only and interest thereon has to be allowed and it cannot be disallowed by saying that CCDs are equity and not debt. - AT
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Penalty u/s 272A(2)(k) - delay in submitting the quarterly TDS Statement in Form 26Q - Once the assessee has stated on the affidavit and given an undertaking that the assessee has not paid any amount or deducted any TDS on any sum during these assessment years which requires to submit in Form 26Q, the levy of penalty for default of delivering the From 26Q is invalid and consequently the penalty order passed by the AO is bad in law, ab initio. - AT
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Exemption u/s 11 - denying the grant of registration u/s 12AA - There is no material brought on record by CIT (E) which suggests that genuineness of activities are in doubt. - CIT(E) directed to grant the registration from the date of the application i.e., 23.05.2019. - However, CIT(E) is not empowered to grant the registration with retrospective effect, there are no provisions providing exceptions to the sub-section (2) of Sec.12A under the statute. - AT
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Exemption u/s 10(10) - Total Sum received in excess of amount specified in Section 4(3) of the Payment of Gratuity Act. - Refund of income tax as deducted at source (TDS) on the gratuity paid to the Petitioner - Enhanced limit for Central government employees versus for employees of PSUs - The said amendment is pursuant to an Act of Parliament which admittedly entered into force only on 29.03.2018. As such, the endeavour by the Petitioner to enforce the said amendment from 01.01.2016 is liable to be rejected. - HC
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Levy of penalty u/s. 271B - The infraction of Section 44AB gets attracted only when the assessee maintains the books of accounts but fail to get them audited - no reason to initiate penalty u/s 271B. The penalty for non-maintenance of books of accounts has already been rightly levied, hence the offence has already been taken note of and the only recourse is to levy penalty u/s 271A for non-compliance of Section 44AA. - AT
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Capital gain on transfer of development rights (TDR) - since the impugned capital asset transferred by the assessee upon which long term capital gain has been computed by the AO is on account of transfer of Development Rights in the land of the assessee. The land itself has not been transferred by the assessee. Thus, in our opinion provisions of section 50C have been wrongly applied upon the impugned transaction. - AT
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Power of CIT(A) in enhancing the addition - violating the law u/s 251(2) - enhancement of addition made u/s. 68 - the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, and the AO was satisfied with the identity, creditworthiness and genuineness of the share applicants - addition confirmed as well as the enhancement made by Ld CIT(A) cannot be sustained because it was merely based on surmises and conjectures. - AT
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Characterization of income - consideration received by the partner of a firm upon retirement from the firm - retirement benefit - any money received by the partner upon retirement from the partnership firm as his share in the assets of the partnership concern is not a consideration for transfer of his interest in the partnership to the continuing partners and there is no transfer within the meaning of section 2(47) - the charging provision as provided under section 45 of the Act would also fail - AT
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Addition u/s. 56(2)(vii) - Applicability for properties which are under construction? - AO mechanically applied provisions of section 56(2) to bring he difference between the stamp duty value and the actual sale consideration paid by the assessee without making any efforts to find out the actual cost of the property when in fact the assessee stated that the property when purchased was under semi construction stage and there were disputes between builders and the purchasers and ultimately the builder was abandoned the project and left - Additions deleted - AT
Customs
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Provisional release of seized goods - The differential duty already paid is with respect to the recovered parallel invoices and the demand now raised in Exhibit P8 is based on the computation of probable undervaluation with respect to the other bills of entry, which also disclosed only lesser invoice value as admitted by the Managing Partner of the appellant. - On the apprehension raised by the appellant that release would be only on deposit of cash, we make it clear that the order itself provides for execution of bond or Bank Guarantee to the satisfaction of the Commissioner. - HC
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Legality and validity of such seizure of goods - It is evident from the seizure memo as well as the materials as on that date i.e., 09.01.2020 that there could not have been any reason to believe by the proper officer that the goods seized were liable to confiscation. Therefore, the very action of seizure is devoid of jurisdiction and hence illegal. If the very act of seizure is illegal, all consequential actions would have no legal sanction - HC
Indian Laws
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Dishonor of Cheque - Admittedly, the present petitioner neither signed the cheque in question nor signed nor witnessed the Distributorship Agreement. In fact, it has not even been averred that the petitioner was even present at the time of signing the agreement. The person who has signed the cheque in question and the Distributorship Agreement - husband of the petitioner as well as the company have also been summoned as accused in the complaint case along with the present petitioner. The present petition has been filed only on behalf of the petitioner. - Thus, necessary ingredients required to constitute the offence under Section 141 of the N.I. Act qua the present petitioner are not satisfied - HC
Service Tax
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Refund of unutilized/accumulated Cenvat credit - refund rejected on the ground of input credit availed being prior to the date of registration - When the assessee claims that the issue on hand stands covered by an order of a higher forum, in respect of the very same assessee but for a different period, such previous order/s of a higher Forum shall be followed as long as the same are not stayed/set aside by Hon’ble High court - AT
Central Excise
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Rejection of rebate claim - In the case in hand, it is not in dispute that the goods were exported by sea and the bills of lading are dated 03.06.2004 and 18.06.2004. Hence, any date prior to that cannot be taken as the date of export of goods. - The plea of estoppel is also merely to be noticed and rejected for the reason that there cannot be estoppel against statute. Once Section 11-B of the Act clearly defines when the goods are treated to be exported. - HC
VAT
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Grant of stay for full amount of tax - I am unable to understand as to why and what circumstances did the Tribunal direct the deposit of 10% of the amount after having recorded that a prima facie case was made out and the deposit would cause financial hardship to the revisionist. - HC
Case Laws:
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GST
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2020 (12) TMI 140
Levy of tax on lotteries - legality of definition of goods under Section 2(52) of Central Goods and Services Tax Act, 2017 and consequential notifications to the extent it levies tax on lotteries - petitioner seeks declaration that the levy of tax on lottery is discriminatory and violative of Articles 14, 19(1)(g), 301 and 304 of the Constitution of India. Whether the writ petition is not maintainable under Article 32 of the Constitution of India since the writ petition relates to lottery, which is res extra commercium and the petitioner cannot claim protection under Article 19(1)(g)? - HELD THAT:- The writ petition alleging the violation of Article 14 specially with respect to a parliamentary Act can very well be entertained under Article 32. Also, with regard to the matter of lottery itself, this Court had entertained a writ petition earlier under Article 32. Reference is made to judgment of this Court in H. Anraj and Ors. Vs. State of Maharashtra, [ 1984 (1) TMI 336 - SUPREME COURT ] where the writ petitioner, who were agents for the sale of tickets for the lottery filed a writ petition questioning the ban imposed on the sale of lottery tickets within the State of Maharashtra. Even judgment of this Court in H. Anraj Vs. Government of Tamil Nadu, [ 1985 (10) TMI 258 - SUPREME COURT ] was also a writ petition, which was heard alongwith a civil appeal questioning the leviability of the sales tax by the State Legislature on the sale of lottery tickets - thus, the grounds, which have been raised in the writ petition, the writ petition cannot be said to be not maintainable under Article 32 and the preliminary objection made by the learned ASG that the writ petition cannot be entertained under Article 32 and is overruled. Whether the inclusion of actionable claim in the definition of goods as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is contrary to the legal meaning of goods and unconstitutional? - Whether the Constitution Bench judgment of this Court in Sunrise Associates (supra) in paragraphs 33, 40, 43 and 48 of the judgment has laid down as the proposition of law that lottery is an actionable claim or the observations made in the judgment were only an obiter dicta and not declaration of law? HELD THAT:- The definition of goods under Section 2(52) of the Act,2017 does not violate any constitutional provision nor it is in conflict with the definition of goods given under Article 366(12). Article 366 clause(12) as observed contains an inclusive definition and the definition given in Section 2(52) of Act, 2017 is not in conflict with definition given in Article 366(12). As noted above the Parliament by the Constitution(One Hundred and First Amendment) Act, 2016 inserted Article 246A. a special provision with respect to goods and services tax. The Parliament was fully empowered to make laws with respect to goods and services tax. Article 246A begins with non obstante clause. Thus, the inclusion of actionable claim in definition goods as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is not contrary to the legal meaning of goods and is neither illegal nor unconstitutional - also, lottery is an actionable claim as proposition of law. Whether exclusion of lottery, betting and gambling from Item No.6 Schedule III of Central Goods and Services Tax Act, 2017 is hostile discrimination and violative of Article 14 of the Constitution of India? - HELD THAT:- The Constitution Bench in State of Bombay Vs. R.M.D. Chamarbaugwala and Anr. [ 1957 (4) TMI 55 - SUPREME COURT ] has clearly stated that Constitution makers who set up an ideal welfare State have never intended to elevate betting and gambling on the level of country's trade or business or commerce. In this country, the aforesaid were never accorded recognition of trade, business or commerce and were always regulated and taxing the lottery, gambling and betting was with the objective as noted by the Constitution Bench in the case of State of Bombay Vs. R.M.D. Chamarbaugwala and Anr. [ 1957 (4) TMI 55 - SUPREME COURT ] , we, thus, do not accept the submission of the petitioner that there is any hostile discrimination in taxing the lottery, betting and gambling and not taxing other actionable claims. The rationale to tax the aforesaid is easily comprehensible as noted above. Hence, we do not find any violation of Article 14 in Item No. 6 of Schedule III of the Act, 2017. Whether while determining the face value of the lottery tickets for levy of GST, prize money is to be excluded for purposes of levy of GST? - HELD THAT:- The value of taxable supply is a matter of statutory regulation and when the value is to be transaction value which is to be determined as per Section 15 it is not permissible to compute the value of taxable supply by excluding prize which has been contemplated in the statutory scheme. When prize paid by the distributor/agent is not contemplated to be excluded from the value of taxable supply, we are not persuaded to accept the submission of the petitioner that prize money should be excluded for computing the taxable value of supply the prize money should be excluded. We, thus, conclude that while determining the taxable value of supply the prize money is not to be excluded for the purpose of levy of GST - the petitioner is not entitled to reliefs as claimed in the writ petition. The petitioner has prayed for grant of liberty of challenging the notifications dated 21.02.2020/02.03.2020 by which rate of GST for lottery run by the State and lottery organized by the State have been made the same, which notification has not been challenged in the writ petition since the notifications were issued during the pendency of writ petition. Petitioner has prayed that the said issue be left open, the notification having not been challenged in the writ petition liberty be given to the petitioner to challenge the same in appropriate proceedings - petition dismissed.
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2020 (12) TMI 135
Service of copy of order u/s 169 - Confiscation of goods alongwith vehicle - goods were not accompanied by the requisite E-way Bill-01 - contention of petitioner is that admittedly the copy of the order was served upon the driver of the truck, who, by no stretch of imagination, can be termed as representative of the petitioner - HELD THAT:- As per section 169 of UPGST Act, it is clear that service on the driver would not fall within any of the category specified from the Clause a to f of Section 169 (1) of the Act. The order impugned in the present writ petition is wholly arbitrary, illegal and contrary to the mandate of Section 169 of the Act - Petition allowed.
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Income Tax
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2020 (12) TMI 134
Exemption u/s 10(10) - Total Sum received in excess of amount specified in Section 4(3) of the Payment of Gratuity Act. - Refund of income tax as deducted at source (TDS) on the gratuity paid to the Petitioner - Enhanced limit for Central government employees versus for employees of PSUs HELD THAT:- In this case, it is expressly stated that the amendment to Section 4(3) of the Payment of Gratuity Act would take effect from 29.03.2018. As a corollary, the increased exemption limit in the Income Tax Act is made applicable only to persons who retire on or after 29.03.2018. In the absence of a challenge to Section 10(10) of the Income Tax Act, in our view, the relief prayed for cannot be granted. Extensive arguments were advanced to the effect that the stipulation of 29.03.2018 as the appointed date for the amendment to Section 4(3) is unconstitutional; therefore, the said contention is examined. The said amendment applies in respect of receipt of gratuity under the Payment of Gratuity Act. As between recipients of gratuity under the Payment of Gratuity Act, there is no discrimination as regards the date of entry into force of the increased ceiling. The party-in-person alleges that the impugned notifications are discriminatory on the basis that Central Government employees and employees of public sector undertakings should be treated on a par. In our view, this contention cannot be countenanced. The terms and conditions of employment vary significantly as between employees of the Central Government and those of public sector undertakings and, indeed, even as between different public sector undertakings. Therefore, these classes of employees do not constitute a single homogeneous class. Consequently, the contention that employees of public sector undertakings, such as the Petitioner, should be treated in the same manner as regards gratuity as the employees of the Central Government is rejected. Petitioner is seeking exemption from the payment of income tax. As per the settled legal position in this regard, an exemption provision or exemption notification is required to be construed strictly and ambiguity, especially as regards applicability, is required to be resolved in favour of the revenue. Section 10(10)(ii) of the Income Tax Act exempts amounts received as gratuity from the income of the assessee to the extent specified in Section 4 (3) of the Payment of Gratuity Act. The undoubted position is that Section 4(3) of the Payment of Gratuity Act specified the limit of ₹ 10 lakhs as on the date of retirement of the Petitioner. This limit was increased to ₹ 20 lakhs by an amendment which admittedly came into force only on 29.03.2018. As a corollary, the exemption limit was raised to ₹ 20 lakhs by an amendment to the Income Tax Act only in respect of persons who retired or died on or after 29.03.2018. Upon perusal of the amendment notifications, we find that the Petitioner has completely failed to make out a case that the amendments should be implemented with retrospective effect from 01.01.2016. In our view, the judgment of the Hon'ble Supreme Court in D.S.Nakara case [ 1982 (12) TMI 151 - SUPREME COURT] does not come to the aid of the Petitioner inasmuch as the said judgment dealt with a cut-off date with regard to the payment of pension. In this case, we are concerned with the date of entry into force of an amendment to the Payment of Gratuity Act. The said amendment is pursuant to an Act of Parliament which admittedly entered into force only on 29.03.2018. As such, the endeavour by the Petitioner to enforce the said amendment from 01.01.2016 is liable to be rejected.
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2020 (12) TMI 132
Refund withheld u/s 241A - HELD THAT:- At this stage petitioner wishes to withdraw the present writ petition to challenge the action under Section 241A of the Act. With the aforesaid liberty, the present writ petition and pending application stand disposed of. All the rights and contentions of the parties are left open.
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2020 (12) TMI 130
Demand of tax - non testing the evidence through cross examination - HELD THAT:- If the evidence relied upon by the revenue for confirming a demand against the assessee is not tested, through permitting a cross examination by the assessee, then the untested evidence cannot be relied upon against the assessee while confirming a demand against him. Inasmuch as the impugned orders of the assessing authority rely on material that was not tested, we quash Ext.P4 assessment order and direct the 2nd respondent to pass fresh orders in lieu thereof, after taking note of the observations in this judgment. The 2nd respondent assessing authority shall pass fresh orders as directed after hearing the petitioner, within a period of three months from the date of receipt of a copy of this judgment.
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2020 (12) TMI 124
Addition u/s 68 - burden upon the assessee to prove identity of the creditors, genuineness of the transaction and creditworthiness of the creditors - HELD THAT:- It is not in dispute that assessee filed confirmation of all the creditors supported by their computation of income, acknowledgment of filing of the returns, copy of the balancesheet, copy of the ledger account of the assessee in their books and bank statements. Copies of the same are also filed in the paper book which reveal that all the creditors are assessed to tax and have given loans to the assessee through banking channel. The name of the assessee appears in their balance-sheet as giving loans to the assessee. their capital and assets are sufficient to give small loan to the assessee. There are no cash deposits found in the bank accounts of the creditor. All entries are through banking channel. The assessee has also furnished details of their capital and assets before the Ld. CIT(A) which have not been disputed by the authorities below. All the evidences on record clearly indicates that assessee has received genuine loans from all the three parties and in case of one party even amount have been returned in assessment year under appeal which have not been doubted by the A.O. Thus, the initial burden upon the assessee to prove identity of the creditors, genuineness of the transaction and creditworthiness of the creditors have been discharged by the assessee. It is well settled Law that assessee need not to prove source of the source. Since the A.O. did not conduct any enquiry on the documentary evidences filed by the assessee and merely disbelieved the entries in the bank accounts of the creditor without any justification, therefore, there were no justification for the authorities below to make or confirm the additions. Merely low income declared in the return of income by the creditors is no ground to reject the explanation of assessee because their creditworthiness is proved by the assessee beyond doubt. In view of the above, we are of the view that the issue is covered by the Order of the ITAT, Delhi G-Bench, Delhi in the case of M/s. Thirubala Chemicals Pvt. Ltd.[ 2020 (10) TMI 405 - ITAT DELHI ] - we set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
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2020 (12) TMI 123
Rectification of mistake u/s 254 - Disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) - whether non-consideration of the Hon ble Supreme Court judgement would constitute a mistake apparent on record within the meaning of Section 254(2) - HELD THAT:- Admittedly assessee had infact made reference to the decision of the Hon ble Apex Court in the case of Godrej Boyce Manufacturing Company Limited [ 2017 (5) TMI 403 - SUPREME COURT ] and the same had not been considered by this Tribunal while addressing the issue in dispute. Hence, we deem it fit that this is a mistake apparent on record warranting rectification u/s. 254(2) of the Act. Since, we hold that the order deserved to be recalled on the aforesaid ground, the alternative ground raised by the assessee i.e. restricting disallowance of expenses u/s.14A of the Act to ₹ 50,000/- alone, is hereby left open in view of recalling of the order. Accordingly, the order for A.Y.2008-09 passed by this Tribunal is hereby recalled. Miscellaneous Applications preferred by the assessee are allowed.
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2020 (12) TMI 120
Disallowance u/s 40(a)(i) - amount was erroneously shown under miscellaneous income - assessee has reversed a sum during the current year itself - HELD THAT:- Details of miscellaneous income that a sum of ₹ 32,93,513/- has been shown as reversal of the amount payable to M/s Gartner. If the said reversal was made out of the expenditure of ₹ 68,05,703/- originally booked by the assessee during the year under consideration, then there is merit in the claim of the assessee, i.e., what is payable to M/s Gartner for the year under consideration would be the net amount - as submitted by Ld D.R, it is not clear as to whether the above said reversal was related to the expenditure originally booked or it related to any other liability. Accordingly, we are of the view the above said claim of assessee requires examination with reference to the books of accounts and profit loss account of the assessee. If the reversal pertains an expenditure booked/included - the disallowance requires to be restricted to the net amount of expenditure claimed by the assessee. Accordingly, we restore this claim of the assessee to the file of AO for examining it properly. Payment made towards subscription charges in respect of business carried on by the assessee in USA - as submitted that the above said payment is not liable for deduction of tax at source in view of section 9(1)(vi)(b) - HELD THAT:- We notice that the exception provided under sec.9(1)(vi)(b) would apply only if the royalty is paid by a resident assessee for the purposes of business or profession carried on by such person outside India. We notice that the assessee has, for the first time, made the claim before Ld CIT(A) that its USA branch is carrying on business separately and subscription services are exclusively used by it. As noticed earlier that the Ld CIT(A) has rejected the said claim for the reason that the assessee has failed to substantiate its claim; that the assessee has failed to show that the impugned services were used by its foreign branch only and that certain bills have been found at the Indian address of the assessee. A.R prayed that the assessee may be provided with one more opportunity to prove all its claims. Hence, in the interest of natural justice, we are of the view that the assessee may be provided with an opportunity to substantiate its claim. We have noticed that the Ld CIT(A) has raised very valid points on the claim of the assessee, which is also required to be addressed by the assessee - Accordingly, we restore this issue also to the file of the AO for examining it afresh .
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2020 (12) TMI 119
Capital gain computation - valuation to the DVO - valuation of the immovable property for the purpose of Section 50C - HELD THAT:- In the course of hearing of this appeal, both the learned AR and learned DR were directed to obtain and place on record an endorsement from the Sub Registrar, Gandhinagar, prescribing the actual value of the impugned property, viz., Kino Theatre , situated at No.215/1, Subedar Chatram Road, Nehrunagar, Bengaluru as on 30.06.2012. DCIT has written to the District Registrar requesting for information in the case of the assessee. In response to the letter of the DCIT, the District Registrar had provided the certified copy of the guideline value fixed by the Government of Karnataka, covering the area (in vernacular). Admittedly, the impugned property is situated on Subadar Chatram Road between Anand Rao Circle and Seshadripuram. This fact is also confirmed by the AO in the remand report dated 30.03.2018 submitted to the first appellate authority. On perusal of the letter of District Registrar dated 29.10.2020, along with the relevant pages of guideline value attached along with the letter of District Registrar, it is clear that the impugned property which is located at Subedar Chatram (SC) Road between Seshadripuram and Anand Rao Circle is governed by entry No.157, where the guideline value fixed as on 30.06.2012 was much less than ₹ 10,000 per sq.ft. adopted by the assessee in the sale deed. CIT(A) s order accepting the sale consideration of ₹ 7.50 crore disclosed by the assessee in her sale deed is upheld as correct and in accordance with law.
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2020 (12) TMI 118
Exemption u/s 11 - denying the grant of registration u/s 12AA - appellant trust had received corpus donations in F.Y. 2018 - 19, the appellant was indulging in profit making activities and the charitable objects were not proved - CIT-E re-characterizing the donations received towards Corpus Fund of the trust as a voluntary donations falling within the ambit of provisions of Sec.2(24)(iia) - HELD THAT:- This is an item for examination during the course of assessment proceedings of the trust and no re-characterization of any receipt is permissible during the course of proceedings for grant of the registration under Sec.12AA of the Act. It is a trite law that when the CIT (Exemptions) found that the objects of the trust are charitable in nature, the denial of registration under Sec.12AA of the Act is improper. There is no material brought on record by CIT (E) which suggests that genuineness of activities are in doubt. The finding of the ld. CIT (Exemptions) that the genuineness of the activities is not established is mere bald finding without any material on record - findings of CIT (Exemptions) cannot be sustained under law. Therefore, we direct ld. Commissioner of Income Tax (Exemptions), Pune to grant the registration from the date of the application i.e., 23.05.2019. Benefit of retrospective registration - HELD That:-. The grounds of appeal raised by the appellant seeking grant of registration earlier to date of application cannot be allowed for the reason that w.e.f 1st day of June, 2007, it is clearly provided vide sub-section (2) of Sec.12A of the Income Tax Act that the provisions of Sec.11 and 12 shall apply in relation to income of the trust from the assessment year immediately following the Financial Year in which the application for grant of registration is made. Impliedly, the ld. Commissioner of Income Tax (Exemptions) is not empowered to grant the registration with retrospective effect, there are no provisions providing exceptions to the sub-section (2) of Sec.12A under the statute. In the light of this discussion, these grounds of appeal are dismissed.
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2020 (12) TMI 117
Disallowance of interest expenditure u/s 36(1)(iii) - assessee has given interest free loans to related concerns - assessee has contended that the interest free funds available with it has been used to make interest free loans to the subsidiaries - HELD THAT:- Since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds - As relying on Brindavan Beverages (P) Ltd [ 2016 (10) TMI 1242 - KARNATAKA HIGH COURT ] we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance. Deemed dividend u/s 2(22)(e) - assessee has received loan of ₹ 8,99,11,142/- from its subsidiary named M/s Assetz Property Services P Ltd, in which the assessee held 99.99% of shares - HELD THAT:- The expression accumulated profits would refer to the Reserves and Surplus accumulated over the years as per the accounts prepared under the Companies Act. - the term accumulated profits has been defined under Explanation 2 to sec.2(22)(e) of the Act. As the said definition does not provide for exclusion of any amount from the accumulated profits . Reversal of Deferred tax liability is nullifying the effect of provision created earlier, meaning thereby, the net monetary effect would be nil, when it is reversed - no adjustment need be made in the year of reversal. Accordingly, the accumulated profit amount determined by the AO is justified and accordingly we hold that the AO was justified in assessing the same as deemed dividend u/s 2(22)(e) - Accordingly, we reverse the order passed by Ld CIT(A) on this issue. Addition u/s 14A - HELD THAT:- Expression does not form part of the total income in Section 14A of the Act envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year.
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2020 (12) TMI 116
Income in hands of assessee - AO made an addition holding that out of the total estimated profit from the units sold in Lodha Supremus 50% profit belongs to the assessee - assessee submitted that in absence of transfer of units in Lodha Supremus , neither a sale can be recorded in the books of the assessee nor any income can be said to have arisen in the hands of the assessee - HELD THAT:- Right to use and occupy the units in Lodha Supremus is inextricably linked to its shares/shareholders - as agreed that SNCML would sell the shares of the assessee which would entitle the buyer of the shares to possess and occupy the designated constructed area. The sale proceeds of shares of the assessee shall be accounted as business receipts by the SNCML. In view of the above arrangement, the assessee-company was left with no right to occupy or sale or lease or deal in any manner with the units of Lodha Supremus as their rights were attached to the shares of the assessee-company and total shareholding of the assessee was with SNCML. Hence, SNCML being holder of the shares of the assessee, carrying right to premises, had entered into an agreement with the third party buyers for transfer of equity shares as a result of which occupancy rights in the units in Lodha Supremus was transferred. During the FY 2010-11, the SNCML has recorded a sales consideration of ₹ 32,81,74,835/-. Thus in absence of transfer of units in Lodha Supremus , neither a sale can be recorded in the books of the assessee nor any income can be said to have arises in the hands of the assessee and consequently no income can be brought to tax in the hands of the assessee - Decided in favour of assessee. Addition on account 8% profit - AO taxing presumptively at 8% of the cost of construction of the project Lodha Supremus , treating the assessee as a contractor for the said project - HELD THAT:- There is nothing on record that the assessee acted as a work contractor on behalf of SNCML to construct the building. The contribution agreement referred to by the AO is nothing but assigning the supervision of the construction to the assessee by SNCML as per section 10 of MOFA. The said agreement unlike that of any work contract, does not assign any contractual profit or commission to the assesseecompany. The assessee received contribution from the prospective unit buyers. The said contribution is entirely taken into account by SNCML for determining profit from the project. It offered the entire profit to tax. The said profit has been taxed in the hands of SNCML (assessee s holding company) even by the Income Tax Settlement Commission (ITSC). No part of the profit has been assigned to the assessee. Further, the computation of the cost of the project does not include any payment made the assessee as a contractor. Thus, the presumption of the AO that the assessee acted as a work contractor and thus earned profit is clearly contrary to the facts. Addition of capital gain - HELD THAT:- The application of section 45(2) is attracted only when there is a conversion of fixed assets into stock-in-trade which is not the case under consideration thereon. Here, the assessee has no right to sell any unit, the godown right was embedded in the cost of the units developed which were sold by SNCML. Section 45(2) which relates to capital gain arising out of conversion of capital asset into stock-in-trade requires that in order to be chargeable to tax, there has to be a transfer u/s 2(47) of the Act and capital gain shall be brought to tax in the year in which the stock-in-trade has been sold. Since, there is no conversion of capital asset into stock-in-trade and there is no transfer of such right by the assessee-company since it has not sold any units of Lodha Supremus , as all the sales is recognized and taxed in SNCML, there is no question of any taxability in the hands of the assessee.
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2020 (12) TMI 115
Revised return - Net income determination - disallowance of expenses in the revised return filed by the assessee - since tax liability was not paid to the date of filing of the income tax return therefore applying the provisions of Section 43B the above disallowance was made - HELD THAT:- In most of the cases the assessee has been assessed u/s 143 (3) of the income tax act and no such disallowances as has been made in the current year are made in those years. It is also the fact that the learned assessing officer has not disallowed any of the expenditure on the basis of the individual instances of such expenditure and holding that those are not incurred for the purposes of the business and therefore same are not allowable to the assessee u/s 37 (1) of the income tax act as they are not fully and exclusively incurred for the purposes of the business. In most of the disallowances AO has made ad hoc disallowance is out of those expenditure. Therefore, in the interest of justice it would be proper and just if the net profit ratio of the assessee is assessed at certain percentage which will also take care of the lower net profit shown by the assessee. It is also required to be appreciated that for the impugned assessment year the assessee s turnover has clocked at more than ₹ 15 crores, which is the highest among all those years stipulated above. AO was not shown all the bills and vouchers of expenses incurred by the assessee. Therefore it is not the case of the assessee that all those expenditure incurred by the assessee are wholly and exclusively incurred by the assessee, as without production of them it would not be possible for the learned assessing officer test this expenditure on those criteria - it is also not the case of AO that assessee has not produced details before him. AO has completely verified the books of accounts, sales bills, purchase bills, bank statements et cetera during the course of the assessment proceedings and did not find any defect in them AO has made certain disallowance holding them to be excessive and unreasonable by applying the provisions of Section 40 A (2) of the act without finding that to what extent they are unreasonable or excessive having regard to the market price of such services. In any case, if the learned assessing officer would have rejected the books of accounts then naturally he would have as the assessee at the net profit rate We direct the AO to restrict the net income of the assessee at 1.90 percentage of the total turnover of 15.63 crores which would be ₹ 2,970,532 compared to the net profit shown by the assessee of ₹ 23,55,800/ - AO is directed to assess the total income of the assessee at ₹ 2,970,532 plus a sum of ₹ 3,091,133/ [ 43B disallowance ] - Appeal of the assessee is partly allowed.
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2020 (12) TMI 114
Short tern capital gain - leasehold right transferred by the assessee as per registered agreement to sale to one Smt. Deepika Kapoor - applicability of provisions of section 50C - According to the assessee leasehold rights are neither land or building or both - HELD THAT:- On careful perusal of the fact it is apparent that the issue is squarely covered in favour of the assessee by the decision of the Hon ble Bombay High Court CIT Vs. Greenfield Hotels and Estates Pvt. Ltd [ 2016 (12) TMI 353 - BOMBAY HIGH COURT] wherein held that provisions of section 50C will not be applicable while computing the capital gain on transfer of leasehold rights in land and plot. The issue is also covered in favour of the assessee by the decision of the coordinate bench in case of Ritz Suppliers Pvt. Ltd [ 2020 (1) TMI 726 - ITAT KOLKATA] , Pyaribai K Jain [ 2019 (2) TMI 1055 - ITAT MUMBAI] and Kencast Pvt. Ltd [ 2015 (4) TMI 588 - ITAT PUNE] . In view of the above binding precedents we allow ground No. 2 of the appeal which challenges that provision of section 50C of the Act do not apply on transfer of leasehold right in plot of land and direct the ld AO to delete the addition - Decided in favour of assessee.
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2020 (12) TMI 113
Penalty u/s 272A(2)(k) - delay in submitting the quarterly TDS Statement in Form 26Q - order passed by the AO u/s 154 after the penalty order passed u/s 272A(2)(k) - HELD THAT:- CIT(A) has not even considered the fact that the penalty proceedings were initiated by the AO for default on the part of the assessee on account of non - filing of Form 26Q within the period specified u/s 200(3) read with proviso to section 206(3) of the Income Tax Act. Once the assessee has stated on the affidavit and given an undertaking that the assessee has not paid any amount or deducted any TDS on any sum during these assessment years which requires to submit in Form 26Q, the levy of penalty for default of delivering the From 26Q is invalid and consequently the penalty order passed by the AO is bad in law, ab initio. Once the initiation of the penalty is based on some wrong facts and wrong ground which is not an error or mistake due to any incorrect mentioning of provision of law but the very basis of initiation of the proceedings was misconceived by the AO being the TDS statement in Form 26Q was not delivered by the assessee within the specified time. AO has accepted that the assessee was not under any obligation to deduct TDS in respect of the alleged transaction but the assessee was under the obligation to collect the tax in respect of various amounts received by the assessee and consequently the assessee was required to submit the statements in Form No. 27EQ. Once the AO has accepted this fact that the assessee was not required to deduct TDS or submit Form 26Q then the initiation of the penalty by the AO for such a non- existing default renders the penalty order invalid. The invalid initiation of the penalty vitiates the entire proceedings and consequently the penalty orders passed u/s 272A(2)(k) based on absolutely non- existing grounds is not sustainable in law. The CIT(A) has summarily dismissed all the appeals of the assessee without even discussing the correct fact brought on record and accepted by the AO while passing 154 order. Hence the impugned penalty orders are not sustainable in law and liable to be quashed. - Decided in favour of assessee.
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2020 (12) TMI 112
Correct head of income - income of share transaction - business income OR capital income - Period of holding of shares - HELD THAT:- CIT(A) taking into account all facts of assessee`s case has directed the assessing officer to treat the 'Capital Gain from sale of shares held by the assessee for a period of one month or more, but less than one year should be treated as investment and profit earned from sale of the same should be assessed as Short Term Capital Gain ; while the shares held for less than a month should be treated as trading purchases of the assessee and profits from the same should be assessed under the head 'Business Income'. Having gone through the order of ld. CIT(A), we noticed that there is no any infirmity in the order and reasoning given by the ld. CIT(A). That being so, we decline to interfere with the order of Ld. CIT(A) in directing the assessing officer, his order therefore, upheld and the grounds of appeal of the assessee are dismissed.
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2020 (12) TMI 111
Assessment u/s 153C - HELD THAT:- As relying on Shri. Panati Vittalnath Reddy Vs DCIT [ 2020 (3) TMI 572 - ITAT BANGALORE ] uphold the validity of assessment u/sec 153C of the Act and dismiss this ground of appeal of the assessee. Estimation of business income by the AO @12% of gross receipts - AR s contentions are that the assessment has not abetted since the time limit for issue of notice under section 143(2) of the Act expired before date of search - HELD THAT:- There is no addition made under section 153C of the Act as the assessment is not abated on the date of search and partly allow the appeal of the assessee. Restrict the estimation of income @ 8% of gross receipts and partly allow the grounds of appeal of the assessee. Addition being 1/3rd of the cash seized at the time of search - HELD THAT:- As assessee has cash withdrawals prior to the date of search. Therefore, the AO is not justified in making addition - we direct the AO to delete the addition and allow this ground of appeal of the assessee. Addition being 1/3rd of the gold seized at the time of search - HELD THAT:- In the present case, the assessee has disclosed 329 grams jewellery purchased in A.Y. 2011-12 and 60 grams of jewellery received during marriage and the total aggregating to 379 grams. We find the coordinate bench of tribunal has dealt in the case of Shri Panati Vittalnath Reddy VS DCIT [ 2020 (3) TMI 572 - ITAT BANGALORE ] has deleted the addition - The assessee is owning the jewellery aggregating to 389 grams and supported with the evidence. We are of the view that no addition can be sustained.
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2020 (12) TMI 110
TP adjustment - Recharacterising the compulsorily convertible debentures (`CCDs') as equity shares - Disallowance of capitalisation of interest expenditure on CCDs - Whether TPO has erred in law by recharacterising the CCDs into equity shares since a Transfer Pricing Officer ('TPO') does not have powers under the Act to recharacterise any international transaction? - HELD THAT:- As decided in M/S. CAE FLIGHT TRAINING (INDIA) PVT. LTD. (VICE-VERSA) [ 2019 (8) TMI 554 - ITAT BANGALORE] as per the tribunal order of Mumbai Bench rendered in the case of Besix Kier Dabhol, SA [ 2010 (11) TMI 589 - ITAT, MUMBAI] in which the issue was decided in favour of the assessee on this basis that in the absence of specific Thin capitalization Rules in India, recharacterization of Debt Capital as equity Capital and disregarding of interest is not in order. Interest payment in the present case did not constitute an intraorganization transaction at all. Even if these interest payments were to be treated as intra-organization transactions by treating the same as payments made to the GE, and not to the joint venture partners, these payments cannot be viewed as notional payments because in such a situation the GE will have corresponding liability to pay the same to the joint venture partners. We have also noted that the interest paid by the assessee may have been contrary to the spirit, if not letter of the RBI guidelines, but then this fact, by itself and particularly in view of Explanation to s. 37 being confined to the amounts admissible as deduction u/s. 37, does not render the interest paid by the assessee as not deductible, and it is not even necessary to examine the scope of Explanation to s. 37. Tax considerations may have played a role in assessee s planning the capital structure, but an element of planning in structuring capital does not transform a tax-deductible expense of interest into an expense that is non-tax deductible. In view of these discussions, it is clear that the impugned disallowance is indeed contrary to the scheme of the law as it exists; the grievance of the taxpayer deserves to be upheld. In our considered opinion, till the date of conversion, for allowability of interest u/s 36 (1) (iii) of Income tax Act also, such CCDs are to be considered as Debt only and interest thereon has to be allowed and it cannot be disallowed by saying that CCDs are equity and not debt. We hold accordingly. This issue is decided. -Being so, taking a consistent view, we remit the issues in dispute to the file of AO/TPO on similar directions.
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2020 (12) TMI 109
Addition u/s. 115JB - assessee is a company carrying on the business of generation and selling of power had filed Nil return of income under normal provisions of the Income Tax Act - assessee claimed that the provisions of section 115JB of the Act were not applicable to the assessee as there was no tax payable on the income as per the regular computation of income under the Act, which is a sine qua non for application of the provisions of the Act u/s. 115JB - HELD THAT:- As decided in own case [ 2018 (11) TMI 438 - ITAT BANGALORE ] the situation contemplated by the section for which provision has been made to the effect that the company should pay tax on its book profit and thus contribute to the exchequer. Therefore, there can be no escape from the position that the assessee company is caught within the mischief of section 115JB, notwithstanding that the tax payable by it on its total income computed under the normal provisions of the Act is Rs. Nil. It would be anomalous to hold that where tax of Re.!!- is payable on the total income computed under the normal provisions of the Act, then section 115JB would be attracted, but it would not be attracted when the tax payable on the total income is Rs.Nil either because the total income is nil or is a negative figure. It is well settled that the section has to be interpreted in such a manner as to avoid absurdity and also in such a manner as to advance the cause and suppress the mischief Admittedly, the provisions of s. 115JB have been amended w.e.f. 1st April, 2013, the Memorandum Explaining the Provisions of Finance Bill, 2012 while explaining the amendments to s. 115JB, notes that in cases of certain companies such as insurance, banking and electricity companies, they are allowed to prepare the P L a/c in accordance with the sections specified in their regulatory Acts. Thus, to align the provisions of the IT Act, 1961 with the Companies Act, 1956, it was decided to amend s. 115JB w.e.f. 1st April, 2013 to provide that companies which are not required under s. 211 of the Companies Act, 1956 to prepare P L a/c in accordance with Sch. VI of the Companies Act, 1956. P L a/c prepared in accordance with the provisions of their Regulatory Act shall be taken as basis for computing book profit under s. 115JB. For the foregoing reasons, it is held that the provisions of s. 115JB(2) do not apply to the banking companies. - Decided in favour of the assessee.
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2020 (12) TMI 108
Deduction u/s 80P - CIT(A) upheld disallowance of interest income earned by assessee from nationalised/other co-operative banks by holding that, deduction can only be allowed to co-operative societies registered under cooperative societies Act - HELD THAT:- Before us, assessee has not provided the details of interest earned from nationalised/co-operative banks. In our view the issue needs to be revisited by Ld. AO for fresh decision after examining the facts and the light of decision of Hon'ble Karnataka High Court in case of Tumkur Merchants Souharda Credit Co-operative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] wherein decision by Hon'ble Supreme Court in case of Totgars Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] has been duly considered. The Ld. AR has also brought to our notice that Hon'ble Karnataka High Court in case of Pr. CIT vs Totgars co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] confirmed the order of this tribunal allowing deduction under section 80P(2)(d) of the Act on interest received on investments made in co-operative bank. This decision was however not followed in the subsequent judgment in case of Pr. CIT vs Totgars Co-operative Sale society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] . - We therefore restore the issue back to Ld. AO for fresh consideration. - Decided in favour of assessee for statistical purposes.
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2020 (12) TMI 107
Assessment framed by the AO ex-parte u/s. 144 - undisclosed income - Non providing due and reasonable opportunity of being heard to the assessee - admission of additional evidence - HELD THAT:- In the present case, it is an admitted fact that the assessment was framed by the AO ex-parte u/s. 144 of the Act and the assessee had furnished new evidences which were not available either to the AO or the ld. CIT(A), however, these documents now furnished as additional evidence by the assessee go to the root of the matter, therefore, keeping in view the principles of natural justice, the same are to be admitted. As these documents were not before the AO or the ld. CIT(A), we deem it appropriate to set aside this case back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2020 (12) TMI 106
Penalty u/s 271C - Non payment of demand raised u/s 201(1) / 201(1A) - whether the Assessee is guilty of non deduction of tax at source? - HELD THAT:- As decided in own case [ 2019 (11) TMI 1138 - ITAT BANGALORE ] assessee in the present case had disclosed all the materials on which it was claiming deduction. The matter as to whether the deduction was to be given or not, was taken up by the revenue authorities and it was held that certain deductions claimed by the assessee were to be disallowed. It is not disputed that the questions regarding the disallowance of the deductions claimed by the assessee is under consideration by the High Court, as the appeal filed by the assessee has been admitted, on the substantial questions of law which have been reproduced hereinabove. The mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty. - Decided in favour of assessee.
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2020 (12) TMI 105
Addition u/s. 56(2)(vii) - consideration as shown in the conveyance deed is less than market value determined by the Stamp Valuation Authorities for the purpose of charging the stamp duty - AO failed to refer the issue of valuation to District Valuation Officer - addition in respect of share of wife in the property - Whether Section 56(2)(viib) applies only to immovable properties i.e. property which are fully constructed and not on properties which are under construction? - Assessment Order is liable to be canceled on the ground that the Assessing Officer failed to refer the issue of valuation to the District Valuation Officer though he was legally required to do so - HELD THAT:- AO completely ignored the valuation report of the Government Registered valuer submitted by the assessee and the submissions thereon - He mechanically applied provisions of section 56(2) to bring he difference between the stamp duty value and the actual sale consideration paid by the assessee without making any efforts to find out the actual cost of the property when in fact the assessee stated that the property when purchased was under semi construction stage and there were disputes between builders and the purchasers and ultimately the builder was abandoned the project and left. The assessee also stated that what was purchased as per the agreement is different than what was given to him as the property was sold to two persons. So there is dispute in the area acquired by the assessee also. In such circumstances, it was all the more necessary for the AO to refer it to the Valuation Officer which he miserably failed. Even at the stage of appellate proceedings when the assessee produced Valuation Officer s report who valued Flat No. 601 in the very same Building at ₹.1,00,76,000/- the Ld.CIT(A) should have called for remand report and in turn the Valuation Officer s report which the Ld.CIT(A) failed to do so. In such circumstances the addition made by the Assessing Officer is totally unjustified and cannot be sustained. Revenue cannot be allowed a second inning by sending the matter back to the Assessing Officer to prove before the Assessing Officer that the sale consideration was the fair market value of the property purchased by the assessee when the assessee was all along disputing valuation of the property and the revenue miserably failed to find out the correct value of the property both at assessment stage as well as at first appellate stage. - Decided in favour of assessee.
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2020 (12) TMI 104
Revision u/s 263 - AO did not verify whether the assessee has complied with the Guidelines issued by RBI or not - A.O. did not call for any details as to what are the Guidelines issued by RBI which are applicable to the NBFC and failed to verify whether all the conditions stipulated therein have been made - A.O. has not done the assessment in a proper manner and that was the short point which was being emphasized in the show cause notice - HELD THAT:- As we note that there is no presumption that non-following of RBI guidelines in an assessment will result in an order which is prejudicial to the interest of revenue. The RBI guidelines and the prudential norms are not designed to pluck revenue leakage from income tax point of view. These are mandate to ensure that the assessee follows proper Banking norms. Hence, learned CIT s inference that non examination of adherence to RBI guidelines by the Assessing Officer has resulted in a order which is erroneous in so far as it is prejudice to the interest of revenue is liable to be set aside. Moreover as we have already noted the Explanation (2) in section 263 has been added from 1.6.2015 and the same is not operative in the period under consideration. Broken period interest and mark to market loss - on the touchstone of above Hon'ble Bombay High Court decision in State bank of India [ 2018 (6) TMI 1326 - BOMBAY HIGH COURT] when the issues were given in note in the computation of income and case laws were referred, it cannot be said that Assessing Officer has not examined the issues and applied his mind. Assessee has duly explained the quantum of broken period interest being claimed and the basis for the same has been explained in the case of American Express Bank [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] .- CIT s view is that AO has not enquired and applied his mind in as much as the same is not dealt with in the assessment order. On the touchstone of Hon'ble Bombay High Court decision in the case of State Bank of India Vs. ACIT (supra) it cannot be said that the Assessing Officer has not applied his mind on this issue. Once it is held that the Assessing Officer has after application of mind taken a view, learned CIT cannot exercise his jurisdiction u/s. 263 of the Act unless the view is ex facie not tenable. As held in the case of M/s. Malabar Industrial Company Ltd [ 2000 (2) TMI 10 - SUPREME COURT] if two views are possible and one view is adopted by the Assessing Officer with which learned CIT(A) does not agree with, the assessment cannot be held to be prejudicial and erroneous to the interest of the revenue. Broken period interest have to be allowed as revenue expense in the year. Mark to market loss - As computation of income the assessee has explained the accounting policy adopted for recognising mark to market loss and the assessee has quantified the amount also. On the touchstone of the Hon'ble Bombay High Court decision referred above State Bank of India Vs. ACIT (supra) it cannot be held that the Assessing Officer has not applied his mind or made enquiry on the issue. As held above once it is held that the Assessing Officer has applied his mind and has taken one of the possible view, learned CIT cannot invoke its jurisdiction u/s. 263 of the Act. Moreover, in the order u/s. 263 learned CIT(A) has nowhere dislodged the detail submission on this issue by the assessee. - Decided in favour of assessee.
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2020 (12) TMI 103
Characterization of income - consideration received by the partner of a firm upon retirement from the firm - retirement benefit - capital gain tax - HELD THAT:- As compensation received by the assessee upon retirement from the partnership firm as his share in the assets of the partnership firm is not liable to tax as there is no transfer of assets involved. In the case of Addl. CIT vs. Mohanbhai Pamabhai[ 1987 (2) TMI 59 - SC ORDER] - Court has affirmed the decision of the Hon ble Gujarat High Court [ 1971 (9) TMI 56 - GUJARAT HIGH COURT] as held that any money received by the partner upon retirement from the partnership firm as his share in the assets of the partnership concern is not a consideration for transfer of his interest in the partnership to the continuing partners and there is no transfer within the meaning of section 2(47) of the Act. Hon ble Supreme Court in the case of CIT v. Tribhuvandas G. Patel [ 1977 (9) TMI 13 - BOMBAY HIGH COURT] has held that any amount paid to the partner upon his retirement towards his share in assets is not a transfer within the meaning of section 47(ii) of the Act and not liable to capital gain - Even we find merit in the alternative plea taken by the assessee that if the computational provision of capital gain as provided under section 48 of the Act breaks down then the charging provision as provided under section 45 of the Act would also fail as held in the case of CIT vs. B.C. Srinivasa Setty [ 1981 (2) TMI 1 - SUPREME COURT] - Decided in favour of assessee. Disallowance of finance charges - assessee submitted before the AO that the funds were borrowed during the preceding previous year for the purpose of business of the assessee which included hotel consultancy and trademark etc. - HELD THAT:- As assessee has not utilised the borrowed money for the purpose of his business. The Ld. CIT(A) has given a finding of fact that share of profit was assessed to tax on the income under the head Income from other sources which comprised of interest income from loans and deposits. We are in agreement with the conclusion drawn by the Ld. CIT(A) as the assessee has failed to establish that these expenses were incurred for the purpose of business of the assessee. Accordingly, we are inclined to uphold the order of Ld. CIT(A) on this issue by dismissing the ground raised by the assessee. Disallowance u/s 14A read with rule 8D - HELD THAT:- Assessee has incurred a total expenditure of ₹ 10,83,890/- which were incurred for the purpose of business of the assessee and none was having any connection to the exempt income ₹ 10,50,970/- -Thus the remaining expenditure out of the total expenditure was ₹ 32,920/- which can be only attributed to the exempt income. In our opinion, the disallowance can not exceed the actual expenditure incurred by the assessee. Partly allow the ground by directing the AO to restrict the disallowance accordingly.
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2020 (12) TMI 102
Power of CIT(A) in enhancing the addition - violating the law u/s 251(2) - enhancement of addition made u/s. 68 - as per assessee, CIT(A) enhanced the addition in a haste, without even enquiring the veracity of the voluminous documents and the statement recorded by AO which were available in the assessment folder - HELD THAT:- All the share subscriber companies have sufficient Capital / networth to invest in the share capital of the assessee company - share subscribers have also filed before the AO the source from which they subscribed to shares of assessee except M/s Alexa Vintrade Pvt. Ltd. (though not required as per law in force for AY 2012-13). All of the share subscribers have filed their responses, bank statement, audited balance sheet, certificate of ITR etc. The assessee had discharged the onus on it about the creditworthiness of the shareholders. It is also noted that the source of the investments has been clearly brought to the notice of the AO during assessment proceedings - bank statements of all the shareholders as well as that of the assessee were filed before the AO which revealed that the share capital and premium have been subscribed by them through normal banking channel (NEFT or cheque) which goes on to show that the assessee has discharged the onus in respect of genuineness of the transaction. Based on the documents and materials called for by the AO who accepted the same after verification is an act of enquiry and the view taken by the AO in the light of the material / documents is a probable view - though these materials were available in the assessment folder, the ld. CIT(A) has neither found any infirmity about the documents furnished by assessee or the share applicants nor had any information or material in his possession to challenge the veracity of the documents referred to above - CIT(A) s omission to carry out any enquiry to show that the AO s enquiry was wrong, his opinion casting aspersions on the AO s action based on suspicious and conjectures cannot be accepted and so we reverse his actions of enhancement made and restore the assessment order. Thus in this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, and the AO was satisfied with the identity, creditworthiness and genuineness of the share applicants to the tune of ₹ 20.54 crores which action of AO was a plausible view -coming to the action of Ld CIT(A) in enhancing the addition by ₹ 20.54 crores cannot be accepted in the absence of any investigation, much less gathering of evidence by the CIT(A) to disprove the documents found placed in the assessment folder, therefore section 68 addition could not have been made by Ld CIT(A). The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, and the AO was satisfied with the identity, creditworthiness and genuineness of the share applicants - Therefore, we hold that addition confirmed as well as the enhancement made by Ld CIT(A) cannot be sustained because it was merely based on surmises and conjectures - Decided in favour of assessee.
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2020 (12) TMI 101
Capital gain on transfer of development rights (TDR) - Application of section 50C in the case of developmental rights - HELD THAT:- The term 'capital asset' mentioned in the section specifically refers and confines its meaning to 'land or building or both'. Thus, scope of section 50Ci s restricted by the legislature itself to these two types of capital assets only. In the present case before us, the capital asset transferred by the assessee was 'Development Rights in the land' and not the 'Land' itself. If we go through similar provisions of the Act, we find that the legislature has used this expression consciously and carefully and keeping in view its need and objective of legislating section 50C. We should apply the 'Rule of strict Interpretation' as well as 'Rule of Literal Construction' while understanding the meaning and scope of deeming provisions - under the given facts and circumstances, Ld. Counsel has rightly contended that since the impugned capital asset transferred by the assessee upon which long term capital gain has been computed by the AO is on account of transfer of Development Rights in the land of the assessee. The land itself has not been transferred by the assessee. Thus, in our opinion provisions of section 50C have been wrongly applied upon the impugned transaction. Thus, we reverse the action of lower authorities in applying the provisions of section 50C and in substituting any value other than the amount of actual sales consideration received by the assessee. It is also noted by us that for the assessment year under consideration there is no other provisions on the statute which permit the AO to substitute any other value with the full amount of consideration actually received by the assessee, while computing income under the head of capital gains - Ground of the assessee is allowed.
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2020 (12) TMI 100
Levy of penalty u/s. 271(1)(b) - failure to comply with the notices issues u/s. 142(1) - whether there was any reasonable cause for the failure to comply to the notices? - HELD THAT:- The notices have been duly sent to the address of the assessee mentioned in the Panchanama drawn on the date of search and the ld. AR's contention that notices have not been sent to Panchkula cannot be accepted as the Panchkula address do not pertain to the residential address to the assessee. The notices have been rightly sent to the correct address and the assessee could not establish failure to comply to the notices with any reasonable cause. Hence, we decline to interfere with the order of the ld. CIT (A) and hold that the penalty has been rightly imposed by the Assessing Officer. Levy of penalty u/s. 271A - assessee has not been maintaining books of accounts stipulated u/s. 44AA - HELD THAT:- As gone through the provisions of Section 44AA, Section 271A and Section 273B. We have gone through the above provisions, so as to look into whether there was any reasonable cause for the failure to comply to non-maintenance of books of accounts. The notices have been rightly sent to the correct address and the assessee could not establish failure to comply to the provisions of the Act with any reasonable cause. Hence, we decline to interfere with the order of the ld. CIT (A) and hold that the penalty has been rightly imposed by the Assessing Officer for non-maintenance of books of accounts. Levy of penalty u/s. 271B - AO has already imposed penalty u/s 271A on the appellant for non maintenance of books of accounts - HELD THAT:- We find that the Assessing Officer has levied penalty u/s. 271A as well as Section 271B for the same years. The issue of levy of penalty u/s. 271A as well as 271B has been adjudicated in the case of SH. MOHIT GARG, DELHI [ 2020 (6) TMI 719 - ITAT DELHI] audit could not have been conducted in the absence of books of accounts. If a person has not maintained the books of accounts, the question of audit does not arise. The infraction of Section 44AB gets attracted only when the assessee maintains the books of accounts but fail to get them audited - no reason to initiate penalty u/s 271B. The penalty for non-maintenance of books of accounts has already been rightly levied, hence the offence has already been taken note of and the only recourse is to levy penalty u/s 271A for non-compliance of Section 44AA. These two provisions operate under two different realms. Thus the penalty levied by the AO as confirmed by the ld. CIT (A) be obliterated. With regard to the arguments of the ld. DR that owing to the difference in the penalties, it prima facie encourages non- maintenance of books of accounts, at this juncture, we refrain ourselves from trespassing the domain of legislature as to the difference of the quantum of penalty leviable u/s 271A and 271B. - Decided in favour of assessee. Levy of penalty u/s. 271F - search u/s. 132 - failure to furnish return of income which has been confirmed by the ld. CIT (A) - HELD THAT:- We find that the notices have been duly sent to the address of the assessee mentioned in the Panchanama drawn on the date of search and the ld. AR's contention that notices have not been sent to Panchkula cannot be accepted as the Panchkula address do not pertain to the residential address to the assessee. The notices have been rightly sent to the correct address and the assessee could not establish failure to comply to the notices with any reasonable cause. Hence, we decline to interfere with the order of the ld. CIT (A) and hold that the penalty has been rightly imposed by the Assessing Officer. Admission of additional evidences - DR argued that the Panchanama, the bank statement and the proceedings PMLA Court/ACCM Special Act are not any additional evidences which has any material impact on the adjudication of the issue before the Tribunal - addition @10% of the gross receipts - HELD THAT:- The instant case doesn't meet the basic requirement of admitting of additional evidences. The assessee has been accorded sufficient opportunities which he fail to make use of. The additional evidences in the form of any document are examination can be allowed to be produced under the following circumstances -When the Tribunal feels that it is necessary to enable it to pass orders or For any substantial cause or Where the Income Tax authority did not provide sufficient opportunity to the assessee In the present case, none of the three conditions are fulfilled - we find that the proceedings add processes, before the ACCM, Panchanama and the bank statement cannot be treated as additional evidences under Rule 29 which are required for adjudication of the matter. Hence, the application of the assessee under Rule 29 is hereby rejected. AO determined 10% of the gross receipts as income of the assessee for the year in question - The assessee is in the business of manufacturing and trading of perfumery products. The assessee has not furnished any details before the AO or before the ld. CIT(A). The purported additional evidences proposed to be filed by the assessee before the Tribunal do not materially change the profit computed by the AO The gross receipts has reflected in the bank statements have been duly considered by the Assessing Officer while determining the profit @10%. Hence, we hereby uphold the profit determined by the authorities below. No useful purpose would be served by accepting the request of the ld. AR to set aside the case to the Assessing Officer for allowing another opportunity for making further inquiries. Appeals of the assessee are dismissed.
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2020 (12) TMI 99
Addition based upon the discrepancies brought out during the course of survey u/s 133A - admission by the director of assessee company in his statement recorded u/s 133A(3) - loose papers found during the course of survey include number of papers which are not recorded in the books of accounts and during the course of assessment proceedings, the assessee was asked to furnish the page-wise details of the loose papers found during the course of survey - HELD THAT:- Disclosure so made by the director of the assessee company during the course of survey in his statement recorded u/s 133A was on an estimated basis on a prima facie review of the documents found during the course of survey and and subsequently, within a period of two and half months, the assessee on detail examination determined the figure as the figure which remain undisclosed and the same was offered to tax by way of filing the revised return of income for A.Y 2013-14 which has been accepted by the Revenue and since, there was no other material found during the course of survey pertaining to A.Y 2014-15, no amount was offered to tax in the return of income for the impugned assessment year and therefore, the strictest principles of retraction wherein the surrender in the statement so recorded is supported by corroborative evidence and subsequent retraction in absence of any fresh evidence/explanation so advanced by the ld CIT/DR are not applicable in the peculiar facts and circumstances of the present case where the statement of the director of the assessee company was recorded u/s 133A during the course of survey operations and said statement alone without any corroborating material doesn t have any independent evidential value. Addition made merely basis the statement recorded u/s 133A without any corroborating evidence cannot be sustained in the eyes of law and the ld CIT(A) has rightly appreciated the facts of the case and has followed the legal proposition so laid down by the Courts including the jurisdictional High Courts. Appeals so taken by the Revenue are dismissed. Rejection of books of accounts invoking the provisions of section 145(3) - reason why the AO has rejected the books of accounts is that the books of accounts were not found/available at the time of survey and the same have been prepared subsequently and are thus not reliable - HELD THAT:- Once the books of accounts have been prepared/recasted, the AO cannot go back to the stage of survey proceedings and contend that since no books of accounts were available at that point in time, he will not consider the books of accounts so recasted/prepared and furnished subsequently. AO is well within his rights to question the results or the effect of the transactions so reflected in the books of accounts as to whether the same represents a true and fair picture and identifies the defects, if any, however, once the books of accounts have been prepared and submitted for his verification, he cannot deny the very existence of such books of accounts - rejection of books of accounts is not justified in the instant case in absence of any specific defect so pointed out by the AO - no basis has been specified for determining and making the addition of ₹ 50 lacs which, going by plain wordings of the assessment order that such addition is made on account of possible leakage of revenues, is clearly adhoc and cannot be sustained in the eyes of law. - Decided against revenue. Unaccounted advances made to various contractors - deduction being already offered in preceding assessment year - why the amount of ₹ 1,33,27,282/- should not be added back in its income as wrongly claimed in its return of income - HELD THAT:- As far as nature of additional income offered by the assessee in A.Y 2013-14 is concerned, it is admittedly in the nature of advances given to the various contractors engaged by the assessee which were not recorded in the books of accounts. The question that arises for consideration is once this additional income is offered and brought to tax as an intangible addition in the hands of the assessee for the previous assessment year, can the assessee be allowed telescoping/set off of the same in the impugned assessment year. In this regard, the claim of the assessee is that such advances were made to contractors for construction work, which eventually would have formed part of cost of project, however for the reason of non incorporating of such payment in books, cost of project also remained understated to that extent. In other words, the claim of the assessee is that there are unrecorded expenditure/payments made out of such advances which also remain unaccounted for the year under consideration and therefore, the assessee should be allowed the benefit of such unaccounted expenditure out of such unaccounted advances. AO has recorded a finding that no evidence has been furnished that these advances have actually been utilized for incurring any expenditure and the claim of the assessee for set off was denied and the said finding remain uncontroverted before us. We therefore find that there is no evidence on record which can demonstrate that advances to the contractors so offered by the assessee in the previous assessment year have actually been utilized towards project expenditure in the year under consideration. Even where it is assumed that project expenditure must have been incurred out of such advances, there is no evidence on record that such project expenditure also remained unrecorded and unaccounted in the books of accounts for the year under consideration which were finalized and audited much after the date of survey - benefit of set off of such income so offered by the assessee in the previous assessment year cannot be given to the assessee for the impugned assessment year and the contentions so advanced by the ld A/R cannot be accepted. In the result, the sole ground of appeal taken by the assessee is hereby dismissed.
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2020 (12) TMI 98
Assessment completed in the name of an entity not in existence - scheme of merger conceived - HELD THAT:- As the assessment proceedings are being carried out simultaneously for six years and where the common letter was issued for all the years, then the factum of the assessee having been merged with M/s. Akriti was in the knowledge of Assessing Officer, and same cannot be brushed aside. In any case, assessment framed in the name of the non-existing entity cannot stand in the eyes of law. Hence, we hold that the present assessment order is both invalid and bad in law. Ground of appeal No.1 raised by the assessee is thus allowed.
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2020 (12) TMI 97
Disallowance u/s.14A r.w Rule 8D - CIT-A re-worked out disallowance - HELD THAT:- A perusal of section 14A would indicate that the expenditure attributable to earning of exempt income is to be disallowed. If the assessee has not debited any expenditure or has not claimed any expenditure for earning exempt income, then on presumptive basis expenditure cannot be calculated for disallowance. CIT(A) has appreciated the case of the assessee based on the details and explanation given by the assessee, and also observed inaccuracy in working out average investment i.e. instead of ₹ 41,89,019/-, the AO has taken the figure ₹ 1,07,72,757/- because as per the balance sheet, investment income which are exempted as on 31.3.2014 was ₹ 41,89.019 and as on 31.3.2013 was of ₹ 41,89,019/-. We find that the ld.CIT(A) has examined the issue critically and re-worked out disallowance in accordance with the provisions contained in section 14A and the rule referred thereto Disallowance of claim of bad debt - HELD THAT:- This issue is squarely covered by the decision of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT ] and Reliance Petrochemical [ 2010 (3) TMI 80 - SUPREME COURT ] wherein it is held that as per the amended provision, condition precedent for claiming bad debts is that assessee has to write off amount of bad debts in its books of account - in order to claim deduction under section 36(1)(vii) it is sufficient for the assessee to demonstrate that debt in fact has become irrecoverable and it has been written as such in the accounts of the assessee. The assessee in the present case has given a detailed note regarding the reasons for writing off the amounts in its books of accounts before the ld.CIT(A), and held that the AO was not justified in denying the claim of the assessee. No reason to interfere in the order of the CIT(A). It is upheld, and the ground of appeal of the Revenue is rejected.
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2020 (12) TMI 96
Ex parte order - Intimation u/s 143(1) - delay in filing the present appeal by 242 days - HELD THAT:- In case of Collector, Land Acquisition vs MST Katiji [ 1987 (2) TMI 61 - SUPREME COURT] , as held that the expression Sufficient Cause employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It was further held by the Hon ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. In the instant case, applying the same principles, we find that the assessee has all along acted diligently in safeguarding its legal rights and availing the remedies available to it and has acted and taken action basis the advice and assistance sought from its Chartered Accountant. As initially advised not to file an appeal before the Tribunal as the matter relates to processing of return of income and thereafter, he was advised to file the present appeal as there is no legal bar in filing the appeal against the demand raised in terms of processing of return of income and intimation issued u/s 143(1). There is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay. On merits as well where the assessee has raised the issue of chargeability of tax at the maximum marginal rate vis- -vis the slab rate of taxation as applicable in the case of beneficiary of trust, we find that the assessee deserve an opportunity to be heard once and the matter shouldn t be dismissed on mere technicality. Therefore, in the facts and circumstances of the present case, the delay in filing the present appeal is condoned and the appeal is admitted for adjudication. As pursuant to filing of return of income by the assessee on 6.2.2014 which was processed by the CPC and an intimation u/s 143(1) of the Act was issued raising a demand of ₹ 25,950/- on the assessee which has been contested in appeal before the CIT(A). The matter has been listed for hearing on couple of occasions however there has been no compliance on part of the assessee and the matter has thereafter been decided ex-parte by the ld CIT(A) - fact of the matter is that the appeal has not been decided on merits and in absence of findings of the ld CIT(A), no useful purpose would be served in adjourning the matter any further and in the interest of justice and fair play, we deem it appropriate to remand the matter to the file of the ld CIT(A) to provide one more opportunity to the assessee to put forward its contentions and submissions which shall be decided on merits after providing reasonable opportunity to the assessee. - Appeal of the assessee is allowed for statistical purposes.
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2020 (12) TMI 95
Accrual of income - Notional interest income - deployment of funds by the assessee by way of investment in the OCDs - advancing of interest-free unsecured loan - HELD THAT:- Admittedly, there is no case made out by the Assessing Officer that the assessee has received or has any right to receive any income qua the amounts invested/advanced to India Best Buy Pvt. Ltd. which is over and above the amount declared by the assessee. The finding of the CIT(A) in this regard, which we have extracted above, clearly shows that there is no material led by the Assessing Officer to point out that the assessee has actually received or accrued any income corresponding to the interest in question. CIT(A) made no mistake in relying on the case of Shivanndan Buildcon Pvt. Ltd. vs CIT [ 2015 (5) TMI 192 - DELHI HIGH COURT] to say that the AO is not entitled to bring to tax any notional interest income without demonstrating that the assessee had, in fact, received such interest income or that the concern to whom the loan was given had, in fact, paid any such interest to the assessee. It is a trite law that income tax cannot be levied on the ipse dixit of the AO, and, that too on a hypothetical income, which is a step away from real income. Thus, impugned addition computed by the Assessing Officer is merely hypothetical and notional and has been rightly set aside by the CIT(A). As noted by the CIT(A) that the assessee is a wholly owned subsidiary of Oleander Real Estate Private Limited dealing in real estate business. No doubt, the CIT(A) has referred to the investment agreement between the assessee and M/s India Best Buy Private Limited dated 31.3.2011 and such a reference is conspicuous by its absence in the assessment order. Be that as it may, the same does not turn much, inasmuch as the analysis of the nature of the arrangement, being a transaction carried out in the course of the business activity has been consistently canvassed by the assessee, and also noted so by the lower authorities. Thus, the plea of the learned DR to effect that such plea was not before the lower authorities, is not merited. Considering the entirety of circumstances, on this aspect of the matter also, the order of learned CIT(A) is well-founded and does not require any interference from our side. - Decided against revenue.
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2020 (12) TMI 94
Recasting the income of the assessee - NP determination - Whether import purchase amount shown by the Ld. CIT(A) in the recast is erroneous? - HELD THAT:- As purchase amount as evident from books and other records is ₹ 16,20,796/-. We note that the Ld. CIT(A) has accepted this figure of import-purchase after taking note that assessee imported the goods against LC and the entire transaction took place through banking channel as well as there were bills of entry and invoices, so when the Ld. CIT(A) has accepted the purchase of goods on import as ₹ 16,20,796/-, the Ld. CIT(A) erred while recasting to adopt the figure of ₹ 14,60,834/- when the actual purchase price of goods on import was ₹ 16,20,796/-, so there is a difference of ₹ 1,69,962/-[₹ 16,20,796/- - ₹ 14,60,834]. We note that the N.P % shown by the assessee for export of fish dust after recast of export sale account is 21.5% which is reasonable and moreover considering the fact that the action of Ld. CIT(A) will result in N.P of 46%, which will be high and unreasonable. We direct the AO to accept the re-casted export sale account of assessee, wherein the assessee has shown N.P of 21.5% i.e. ₹ 6,70,968/- and accordingly compute the tax. Appeal of assessee is allowed.
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Customs
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2020 (12) TMI 138
Legality and validity of such seizure of goods - Provisional release of goods - allegation is that impugned seizure memo does not comply with the requirements of section 110 of the Customs Act, 1962 - petitioner is also prejudiced as it is incurring heavy detention and demurrage charges every day since the seizure - HELD THAT:- What is relevant here is the parent or main provision of sub-section (1). Sub-section (1) makes it abundantly clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Thus, it is the proper officer who must have reason to believe that the goods in question are liable to confiscation under the Customs Act. Once he forms such a belief then he i.e., the proper officer who has formed the belief may seize such goods - Therefore, formation of reason to believe by the proper officer that the goods in question are liable to confiscation under the Customs Act is the condition precedent for invoking the jurisdiction under section 110 to seize such goods. Having reason to believe by the proper officer that any goods are liable to confiscation is the sine qua non for exercise of the power of seizure. The expression 'reason to believe' is an expression of considerable import and in the context of the Customs Act, confers jurisdiction upon the proper officer to seize goods. It cannot be that seizure is made by one officer and the reasons to believe are recorded by another officer. Secondly, the proper officer who made the seizure must have reasons to believe that the seized goods are liable to confiscation. Seizure of goods is not an end in itself. It is a discretionary power vested upon the proper officer who has reasons to believe that the goods to be seized are liable to confiscation. No such reasons to believe is discernible in the panchnama, not to speak of in the seizure memo. It is apparent that on the date of seizure, the bills of entry were in the name of the petitioner and the petitioner had not (and still has not) claimed any benefit under the Notification No.25/99Customs dated 28.02.1999. It may be mentioned that office of the Commissioner of Customs had informed DRI authorities that the amendments were allowed because NOC was submitted by both the parties i.e., buyer and seller of the high seas sale. It was also mentioned that amendment was allowed as there was no change in the original bills of lading and IGM. At this stage, we may refer to Standing Order No.10 of 2017 dated 03.05.2017 issued by the Commissioner of Customs, Nhava Sheva-IV which has been placed on record by respondent No.3 as Exhibit-E to his affidavit. This Standing Order prescribes the essential documents necessary for registration of high seas sale contract / transaction - there could not have been any reason to believe that the said imported goods had contravened any of the provisions of section 111 dealing with confiscation and hence liable to seizure under section 110. That apart, all the developments mentioned above are post seizure developments which could have no bearing on the validity or invalidity of the impugned seizure. It is evident from the seizure memo as well as the materials as on that date i.e., 09.01.2020 that there could not have been any reason to believe by the proper officer that the goods seized were liable to confiscation. Therefore, the very action of seizure is devoid of jurisdiction and hence illegal. If the very act of seizure is illegal, all consequential actions would have no legal sanction - Also, subsequent cancellation of the amendments to the two bills of entry would make no material difference at all to the illegality of the seizure. Petition allowed.
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2020 (12) TMI 131
Provisional release of seized goods - contention of the Department, is that the bills of entry and the invoice value shown therein were grossly undervalued - HELD THAT:- The Managing Partner in his voluntary statement agreed to produce the parallel invoices with respect to the 25 invoices referred to in the other 25 bills of entry. The same having not been produced, a computation was made of the probable undervaluation based on the average undervaluation; practiced by the appellant in the recovered parallel invoices. On a rough computation, the liability to duty with interest would come to ₹ 18,11,000/-. There would also be penalty payable, in which circumstances a further amount of ₹ 25,00,000/- has been provisionally assessed, which demand was raised in Exhibit P8 for provisional release. Considering the prima facie proof of undervaluation practiced, we do not see any infirmity in the provisional release order. ₹ 25,00,000/- demanded therein is not a replication of the ₹ 20,72,000/- already paid by the appellant. The differential duty already paid is with respect to the recovered parallel invoices and the demand now raised in Exhibit P8 is based on the computation of probable undervaluation with respect to the other bills of entry, which also disclosed only lesser invoice value as admitted by the Managing Partner of the appellant. Appeal dismissed.
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2020 (12) TMI 129
Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
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2020 (12) TMI 128
Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
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2020 (12) TMI 126
Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
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2020 (12) TMI 125
Review of Order - error apparent on the face of record - non-fulfilment of mandatory requirement of pre-deposit - Section 129(3) of the Customs Act, 1962 - HELD THAT:- The Apex Court in the case of HARIDAS DAS VERSUS SMT. USHA RANI BANIK ORS [ 2006 (3) TMI 686 - SUPREME COURT ] has held that rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason. In the present case, there is no error apparent on the face of the record and the petitioner in fact under the guise of review is challenging the order passed by this Court, which is under review. Review petition dismissed.
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Service Tax
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2020 (12) TMI 127
Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. Thus, it is not possible for this Court to express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
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2020 (12) TMI 121
Refund of unutilized/accumulated Cenvat credit - refund rejected on the ground of input credit availed being prior to the date of registration - period April 2012 to June 2012 - D.O.F No. 334/1/2012-TRU dated 16.03.2012 - HELD THAT:- It is unfortunate that the learned First appellate authority (FAA for short) has given some excuses to not to follow the orders of CESTAT, in the appellant s own case. It is not even the case of the learned FAA that the earlier order/s of this Bench that are referred in his own orde, have been reversed by High court or have been set aside. The facts may or may not vary, but the principle that is laid down by a higher forum is required to be followed. For these reasons, the impugned order has to set aside at once. The matter is required to be remanded to the file of ld. FAA to pass fresh order on merits after hearing the assessee. When the assessee claims that the issue on hand stands covered by an order of a higher forum, in respect of the very same assessee but for a different period, such previous order/s of a higher Forum shall be followed as long as the same are not stayed/set aside by Hon ble High court - Appeal allowed by way of remand.
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Central Excise
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2020 (12) TMI 136
Rejection of rebate claim - determination of date of export - Doctrine of promissory estoppel - goods exported after 02.06.2004 - effect of amendment by N/N. 10/2004-C.E.(N.T.) dated 02.06.2004, retrospective or prospective - argument is that goods once packed were beyond the control of the petitioner, the amendment carried out vide notification No 10/2004-C.E.(N.T.) dated 02.06.2004 will not be applicable in the case of the petitioner as the same cannot be given a retrospective effect - principles of estoppel - HELD THAT:- It is the undisputed case of the parties that for export of goods after 02.06.2004, the petitioner will be entitled to any refund of the duty paid in view of Notification No. 10/2004-C.E.(N.T) dated 02.06.2004. Bill of lading against which the petitioner had claimed refund of duty are dated 03.06.2004 and 18.06.2004. That means the goods were exported after 02.06.2004 and not prior thereto. The aforesaid two dates are after the cut of date of 02.06.2004. Any process prior to that will be in aid of export and cannot be considered export as such. Section 11-B of the Central Excise Act, 1944 throws light on the issue as to when the goods are deemed to be exported. Explanation thereto provides that if the goods are exported by sea or air, the date on which the ship or aircraft, in which the such goods are loaded leaves India. In the case in hand, it is not in dispute that the goods were exported by sea and the bills of lading are dated 03.06.2004 and 18.06.2004. Hence, any date prior to that cannot be taken as the date of export of goods. Plea of Estoppel - HELD THAT:- The plea of estoppel is also merely to be noticed and rejected for the reason that there cannot be estoppel against statute. Once Section 11-B of the Act clearly defines when the goods are treated to be exported. Petition dismissed.
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2020 (12) TMI 122
Interest on delayed refund - Refund of pre-deposit - inordinate delay in sanctioning the refund claim by the authorities - relevant date for calculation of Interest - Section 35FF of Central Excise Act, 1944 - HELD THAT:- The appellant is entitled to claim the refund of ₹ 15 lacs. Furthermore, during the course of arguments, it came to the knowledge of the Bench that the appellant filed the appeal against the order of the adjudicating authority appropriating the amount of refund claim before the Commissioner (Appeals) and intimated to the ld. Commissioner (Appeals) vide letter dt. 12.06.2019 that this Tribunal has allowed the refund to the appellant on 21.05.2019. Instead of taking note of the said fact, the ld. Commissioner (Appeals) dismissed the appeal filed by the appellant without taking note of the decision of this Tribunal on 22.07.2019, whereas the order of this Tribunal was uploaded on the website itself on 01.07.2019. The act of the ld. Commissioner (Appeals) cannot be appreciated. Relevant date for calculation of Interest - HELD THAT:- Admittedly, as per Section 35FF of the Act, the appellant was entitled to claim the interest on delayed refund after three months from the date of the order of this Tribunal. This Tribunal has finally disposed of the appeal of the appellant on 05.07.2018 - thus appellant is entitled to claim interest from 19.02.2019 the day on which the refund claim was allowed till its realization. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (12) TMI 133
Grant of stay for full amount of tax - stay of demand was granted upto the extent of 90% of the tax - Enhancement of turnover - astronomical demand based on presumption without any material on record and arbitrary in nature - HELD THAT:- It is well settled that while deciding the waiver application, the authority concerned has to record a finding as to whether a prima facie case is made out or not and whether the deposit would entail undue financial hardship - It is also well settled that the phrase 'prima facie case' would include even an arguable case, I am unable to understand as to why and what circumstances did the Tribunal direct the deposit of 10% of the amount after having recorded that a prima facie case was made out and the deposit would cause financial hardship to the revisionist. In view of the fact that the revision is confined to the challenge of the order passed by the Tribunal, this Court in exercise of its revisional power cannot direct any refund of the amount, which according to the counsel for the revisionist, are illegally debited from the account of the revisionist. The revisionist, if so advised, may take appropriate proceedings for refund of the said amount. The question is decided in favour of the assessee and against the Department - Revision allowed.
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Indian Laws
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2020 (12) TMI 139
Smuggling - Ganja - appellant was found to be in possession of 6.300 kilogram of Ganja - within commercial quantity or not - HELD THAT:- When the quantity/Ganja recovered from the appellant was 6.300 kilogram, which is between small quantity and commercial quantity and considering the fact that the maximum punishment for such offence is 10 years rigorous imprisonment, out of which the appellant has already undergone six years rigorous imprisonment, we allow the present appeal in part and modify the impugned judgment and order passed by the learned trial Court, confirmed by the High Court, to the extent of imposing the sentence of six years rigorous imprisonment in place of ten years rigorous imprisonment as imposed by the learned trial Court and confirmed by the High Court. Rest of the judgment and order passed by the learned trial Court, confirmed by the High Court, is hereby confirmed. Appeal allowed in part.
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2020 (12) TMI 137
Dishonor of Cheque - whether as per the averments made in the legal notice, complaint and the presummoning evidence, the petitioner at the time of commission of offence was in charge of and responsible for the conduct of the business of the company and its day-to-day affairs? HELD THAT:- In the present case, it is seen that in the legal notice issued by complainant company, a bald assertion was made that the co-accused i.e., Krishan Gopal Goyal (petitioner s husband) along with the petitioner had approached the complainant company for being appointed as their authorized distributor and subsequently, at the time when products were provided, they were received/acknowledged by M/s Beyond Tele Private Limited through both of its directors and other representatives. It was also stated that M/s Beyond Tele Private Limited, under instructions from both the directors, had issued the impugned cheque. The complainant company acknowledged the receipt of the reply however, despite coming to know of the aforesaid stand of the petitioner, no specific or further details regarding the date, time and place of the meetings with the petitioner were mentioned either in the complaint filed under Section 138 read with Section 142 of the N.I. Act or in the pre-summoning evidence. Even in the present proceedings, only written submissions have been filed but no reply has been filed by the complainant company either specifically denying the petitioner s stand or giving any further details qua the petitioner. A combined reading of the legal notice, the complaint as well as the pre-summoning evidence would show that in spite of the aforementioned specific stand taken on behalf of the petitioner, no additional averment has come detailing the role of the petitioner either in the complaint or in the pre-summoning evidence. Admittedly, the present petitioner neither signed the cheque in question nor signed nor witnessed the Distributorship Agreement. In fact, it has not even been averred that the petitioner was even present at the time of signing the agreement. The person who has signed the cheque in question and the Distributorship Agreement i.e., Krishan Gopal Goyal (husband of the petitioner) as well as the company i.e., M/s Beyond Tele Private Limited have also been summoned as accused in the complaint case along with the present petitioner. The present petition has been filed only on behalf of the petitioner. Thus, necessary ingredients required to constitute the offence under Section 141 of the N.I. Act qua the present petitioner are not satisfied - petition allowed.
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