Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 14, 2020
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Classification of goods - transformers supplied to Indian Railways - Transformers, though used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for transformer
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Levy of GST - sale of Transferable Development Rights (TDR)/ Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations - The transactions of transfer of development rights/AdditionaI FSI are taxable under GST Laws @ 18%
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Rate of GST - restaurant services - the applicant restaurant is located in the same premises as JW Marriot Hotel having rooms with a tariff of seven thousand five hundred rupees and above, per unit/room per day or equivalent for any unit/room and applicant will be supplying food or drinks for consumption within the JW Marriot Hotel premises. - The applicant must discharge its GST liability @ 18%
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GST liability under Reverse Charge (RCM) - security services - The applicant being only registered as a Tax deductor u/s 51 of the CGST and CGGST Act till 24-6-2019 and having no other GSTIN as supplier of goods or services, would not be liable for GST under reverse charge - However, this situation changes when the applicant have regular GSTIN w.e.f. 25.6.2009
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Classification of supply - The installation of ITS (Intelligent Transport System) is part and parcel of the construction of road transportation system for use by general public and the supply made by the applicant is more appropriately classified under Entry (iv) to Serial No. 3 of the CGST Rate Notification rather than Entry (vi) of the said Notification.
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The deposit work undertaken by the applicant are not an integral part of the supply of services of transmission or distribution of electricity and the applicant is not eligible to avail the exemption from levy of GST.
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Stay on implementation and operation of the impugned sealing memos in relation to the Godown - the godown is used for the purpose of storing agricultural produce like cotton bales and cotton yarn - we are not going into this issue. We are trying to find a way out, by which, the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law - Writ petition is allowed subject to specific directions.
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Second bail application - evasion of tax - It is contended that petitioner has sold the goods without generating the Outward supply invoice and has thus evaded tax - Petitioner has remained in custody for a period of more' than five months. No notice with regard to tax outstanding has ever been issued to the petitioner.
Income Tax
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Exemption/approval u/s 10(23C)(vi) - denial of registration under Section 12AA - The object for upliftment of general public especially women is only with regard to its sole object of educational purpose only, as the intellectual upliftment of general public especially women can only envisage education and nothing else.
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Disallowance on account of salary expenditure - failure of the assessee to furnish the relevant details and documents - the disallowance of 90% of the expenditure claimed by the assessee on account of salary and bonus as sustained by the ld. CIT(Appeals) is highly excessive and unreasonable.
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Depreciation on intangibles - sale as slump sale - All these intangible assets transferred to the assessee have a commercial value - assessee is eligible to claim depreciation on the intangible assets acquired by way of congeries of rights.
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Levy interest u/s 234B - addition made in Book Profit under MAT - No interest can be levied u/s 234B of the Act, for shortfall in payment of advance tax on the basis of retrospective amendment to law.
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Exemption u/s 35(2AB) - there was no approval in form No. 3CM - what is relevant to decide eligibility for weighted deduction u/s 35(2AB) is existence of R&D facility and recognition of such facility by the competent authority. Once the facility has been approved by the competent authority, then there is no cut off date is prescribed for approval of such facility and the benefit of deduction u/s 35(2AB) of the Act, should be given to the assessee as long as the recognition is in force.
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CIT(A) allowing additional evidence without intimating to the AO - While granting relief to the assessee by relying upon the additional evidences, learned Commissioner (Appeals) has violated the conditions of rule 46A - matter restored before the CIT(A) for fresh adjudication after necessary compliance with the provisions of rule 46A
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Validity of Appeal - alternate remedy - reopening of assessment - Single Judge ought to have upheld the objection of the Revenue and relegated the Assessee to the regular Appellate remedy available to the Assessee against the impugned Reassessment Order.
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Allowable expenses u/s 37 - Disallowances of foreign travel expenses and other expenses - the expenses incurred by the Assessee on various items as well as the contribution made to Lady Ampthil Hospital were not allowable expenses
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Recovery proceedings - membership right - priority of Income tax Department over Stock Exchange - the petitioners-exchange would have a priority on the security deposits over the Income Tax Department
Corporate Law
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Striking off of name of the appellant company from the Register of Companies - Except the failure to file the financial statements and returns, there is no complaint against the appellant company - The appellant company is having asset and due to personal difficulties of the Directors they could not start business. - Name restored.
Indian Laws
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Dishonor of Cheque - It is a settled law that a power of attorney holder can file a complaint, appear and depose for the purpose of issuance of process for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The only restriction is that the power of attorney should have a personal knowledge about the transaction between the parties, and in the absence of any personal knowledge, he cannot depose.
Service Tax
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Nature of activity - manufacture or service - processing and packing of marine products for merchant exporters - the appellant’s activity falls under the definition of manufacture and not as taxable service falling under BAS.
Central Excise
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Refund of excess duty - manufacture of clinker and cement - appellant was required to pay the duty @ ₹ 350 PMT as per the Notification No.4/2007, since there was a confusion during the relevant time, they paid the duty @ ₹ 400 PMT and subsequently filed refund claim - Refund allowed
Case Laws:
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GST
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2020 (2) TMI 556
Concessional Rate of GST - manufacture of laboratory medical equipment like Autoclaves, Incubators, Rotary Vacuum Evaporators, etc., and supply the same to their distributors who are not engaged in scientific research of any type - N/N. 45/2017 47/2017 - validity of certificates issued by end users. HELD THAT:- The applicant does not supply goods to end users who undertake or are engaged in the scientific research. The goods are supplied to their distributors only. The applicant has submitted that the end-user institutions, to whom goods are supplied by their distributors, are mainly included in Sr. No. 2 of Notification No. 45/2017-C.T. (Rate) dated 14.11.2017. In respect of institutions mentioned at Sr. No. 2, the said notification clearly states that the said institutions should be registered with the Government of India in the Department of Scientific and Research, which- (i) produces, at the time of supply, a certificate to the supplier, from the head of the institution, in each case, certifying that the said goods are essential for research purposes and will be used for stated purpose only and that, the said goods shall not be or sold by the institution for a period of five years from the date of installation - The said notification requires the said certificate to be issued to the supplier, who in the subject case, is the distributor and not the applicant. Thus it is clear that the applicant does not satisfy the conditions of the said Notification No. 45/2017 - thus, the applicant cannot sell their product to their dealers / distributors by charging GST @ 5.00% as per Notification Nos. 45/2017 - C.T. (Rate) 47/2017 S.T. (Rate), both dated 14.11.2017. Can a certificate issued by the end user (scientific research organization) mentioning the name or the manufacturer (WE in this case) the name of the seller (our distributor) be held valid to enable the applicant to invoice their product to their dealer at concessional rate of GST @ 5.%? - HELD THAT:- In the instant case, the question raised by the applicant is not pertaining to any of the matters mentioned in Section 97 (2) of the GST Act - Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of validity of certificates used by end-users of subject products. Hence, it is held that this authority does not have jurisdiction to pass ruling on such matters.
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2020 (2) TMI 555
Classification of goods - transformers supplied to Indian Railways - to be be classified as Parts of railway or tramway locomotives or rolling stock under HSN 8607 or the transformers shall be categorized under HSN 8504? - HELD THAT:- The classification of goods under Chapter Heading 8607 does not include Electrical transformer . It only refers to parts of railway such as bogies, bissel-bogies, axels, wheels, brakes, hooks and parts thereof, in a general way; whereas, Chapter Heading 8504 clearly includes Electrical transformers, static converters (for example, rectifiers) and inductors . Note 2 (f) to Section XVII mentions that the expressions parts and parts and accessories do not apply to electrical machinery or equipment (Chapter 85), whether or not they are identifiable as goods of this Section - Thus from a reading of Note 2 (f) to Section XVII of the GST Tariff and Note 2 to Chapter 86 of the GST Tariff, the applicant s product, transformers are classifiable under HSN 8504. Circular No. 30/4/2018-GST on January 25, 2018 by the Government of India, Ministry of Finance, Department of Revenue (Tax and Research Unit), New Delhi has issued clarification on classification of supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86 - Therefore, it is very clear that, any product other than those covered under Chapter 86, supplied to the railways would not qualify for the HSN 8607 and are not to be considered as a parts of railway coaches, even if supplied to the railways. Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes. Transformers, though used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for transformer and therefore, the Entry no.241 of Schedule 1 of Notification No. 1/2017 C.T. (Rate) dt. 28.06.2017 does not applies to subject Transformers - Transformers, manufactured and supplied for use in railway, locomotives are classifiable under HSN 8504 and not under HSN 8607. Hence, rate of tax thereon is applicable as per the Sr. no. 375 of Schedule III of the Notification 1/2017 C.T. (Rate) dt. 28.06.2017 @ 18% under GST ACT w.e.f 01.7.2017.
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2020 (2) TMI 554
Levy of GST - sale of Transferable Development Rights (TDR)/ Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations - Classification under GST laws - rate of GST - Circular F. No. 354/32/2019-TRU dated the 14th May, 2019, the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), New Delhi. HELD THAT:- GST is payable at the rate of 18% (9% + 9%) on transfer of development rights or FSI (including additional FSI), under Sl. No. 16, item (iii) of Notification No. 11/2017 - Central Tax (Rate) dated 28-06-2017 (Heading 9972). The transactions of transfer of development rights/AdditionaI FSI are taxable under GST Laws @ 18% (9% CGST+ 9% SGST) under Sl. No. 16, item (iii) of Notification No. 11/2017 - C.T. (Rate) dated 28.06.2017 (Heading 9972).
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2020 (2) TMI 553
Rate of GST - restaurant services - Supply of goods or supply of services - Sr. No. 7, Notification No. 11/2017-CT(Rate) dated 28th June, 2017 - HELD THAT:- The supplies of food and non-alcoholic beverages provided in a restaurant shall be classified as a supply of services and the provisions of the GST law shall apply to such supplies accordingly. As per Sr. No. 7(iii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended, supply of food or drinks in a restaurant for consumption within the restaurant premises or away from the restaurant premises, where the restaurant is located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes with a tariff seven thousand five hundred rupees and above per unit/room per day or equivalent for any unit/room in the premises, the applicable rate of GST will be 18% - there are no hesitation in holding that the applicant restaurant is located in the same premises as JW Marriot Hotel having rooms with a tariff of seven thousand five hundred rupees and above, per unit/room per day or equivalent for any unit/room and applicant will be supplying food or drinks for consumption within the JW Marriot Hotel premises. The applicant must discharge its GST liability @ 18% (9% each of CGST and SGST) as per Sr.No. 7(iii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended.
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2020 (2) TMI 552
Classification of supply - supply of services or not - amount recovered from the employees towards car parking charge payable to Shantiniketan Properties Private Limited (building authorities) - pure agent services - valuation of the services - input tax credit. HELD THAT:- As per the letter dated 28th August, 2018, addressed to the applicant issued by the M/s. Shantiniketan Properties Private Limited (building authorities), there is a Rent Agreement entered into between the applicant and the building authorities and the above referred letter is issued in response to the additional parking space sought by the applicant. The initial Rent agreement copy is not provided by the applicant. Further as per the Employee Handbook provided by the applicant the amount to be recovered from monthly salary of employee availing the parking slots is around INR 1500 per month and INR 500 per month for a four wheeler and two-wheeler respectively . However we notice that this amount shown in the Employees Handbook is not tallying with the details of amount recovered from the employees provided by the party - Further, the 'trail of financial transactions to clarify the pure agent status of the company', as promised by the authorized representative of the applicant at the time of personal hearing, was also not provided by the applicant. In the absence of requisite documents, as discussed in above paras, no ruling can be given on the questions asked by the applicant - application for advance ruling disposed off.
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2020 (2) TMI 551
GST liability under Reverse Charge (RCM) - Providing security services to university - Applicability of GST N/N. 29/2018-Central Tax (Rate), dated 31-12-2018 - HELD THAT:- The applicant being only registered as a Tax deductor under Section 51 of the CGST and CGGST Act till 24-6-2019 and having no other GSTIN as supplier of goods or services, would not be liable for GST under reverse charge, in view of the exclusions as stipulated under proviso to Notification No. 29/2013-Central Tax (Rate), dated 31-12-2018. The liability to GST in such case would be with the service provider viz. the security agency under Forward charge. However with effect from 25-6-2019. the applicant having been registered as a regular dealer and normal taxpayer, holding another GSTIN would be liable to GST under Reverse charge being the recipient of supply of Goods or Services or both under sub-section (3) or sub-section (4) of Section 9, or under sub-section (3) or sub-section (4) of Section 5 of the Integrated Goods and Services Tax Act. It is also noteworthy to mention here that the applicant is not engaged in providing services by way of pre-school education and education up to higher secondary school or equivalent.
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2020 (2) TMI 550
Classification of supply - composite supply of works contract or not - whether classified under Entry (vi) or Entry (iv) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification - rate of GST - Rate of GST with respect to services rendered by the sub-contractors. Whether the composite supply of works contract provided by the applicant to NHAI shall be classified under Entry (vi) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification liable to effective rate of GST @ 12% including CGST and UPGST? - Whether the composite supply of works contract provided by the applicant to NHAI shall also be classified under Entry (iv) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification liable to effective rate of GST @ 12% including CGST and UPGST? - HELD THAT:- The installation of ITS (Intelligent Transport System) is part and parcel of the construction of road transportation system for use by general public and the supply made by the applicant is more appropriately classified under Entry (iv) to Serial No. 3 of the CGST Rate Notification rather than Entry (vi) of the said Notification. Whether the rate of GST with respect to the services rendered by the sub-contractors to the main contractor i.e. the applicant would be applicable @ 12% in view of Entry (vi) and (iv) of the CGST Rate Notification read with the UPGST Rate Notification or @ 18%? - Section 95(a) of CGST Act, 2017 - HELD THAT:- Any person/applicant can seek advance ruling in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by him. However, in the instant case the applicant wishes to know the GST rate for the sub-contractor providing input services to them, which is outside the [purview] of Advance Ruling - no ruling can be issued on this question.
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2020 (2) TMI 549
Supply of services of transmission or distribution of electricity - Deposit Work undertaken by Applicant, integral part of said services or not - composite supply of services - ancillary services to the principal supply or not - exemption given under Entry No. 25 of the exemption notification - input tax credit. HELD THAT:- For a supply to be consider as a composite supply, its constituent supplies should be so integrated with each other that one is not supplied in the ordinary course of business without or independent of the other. In other words they are naturally bundled. The concept of the Naturally Bundled , used in Section 2(30) of the CGST Act, 2017, lays emphasis on the fact that the different element in a composite supply are integral to the overall supply and if one of the element is removed the nature of supply will be affected. In view of the clarification issued under the Circular No. 34/8/2018-GST, dated 1-3-2018, issued vide F. No. 354/17/2018, it is observed that the deposit work undertaken by the applicant are not an integral part of the supply of services of transmission or distribution of electricity and the applicant is not eligible to avail the exemption from levy of GST under Entry No. 25 of Notification 12/2017-Central Tax (Rate), dated 28-6-2017 bearing description Transmission or distribution of electricity by an electricity transmission or distribution utility with respect to the non-tariff charges recovered from their customers. Input tax credit - HELD THAT:- The immovable property created by the applicant does not falls under the category of plants and machinery therefore they are not eligible to claim Input Tax Credit.
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2020 (2) TMI 548
Computation of ITC - alleged profiteering and demand - Petitioner submits that if only the ITC availed of in respect of the residential project is considered, the demand would not be more than ₹ 64 lakhs - HELD THAT:- The petitioner is directed to deposit ₹ 65 lakhs as an interim measure within three months in three equated instalments. The first instalment shall be paid by 15.02.2020. It shall be open to the respondents to seek variation of this order, in case; they claim that the aforesaid statement of the petitioner is not correct by moving an appropriate application - the penalty proceedings shall remain stayed - application disposed off.
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2020 (2) TMI 537
Maintainability of application for rectification - error apparent on the face of the record - HELD THAT:- The issue raised by the applicant by way of rectification application, has already been considered by this authority in the order itself - this authority has rightly decided the matter as per the facts and contention submitted on the record while passing of the impugned advance ruling order and there is no apparent mistake from the record to be rectified in the said order. Therefore, the present application is not found tenable under scope of rectification. Hence it is rejected.
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2020 (2) TMI 536
Maintainability of Advance Ruling application - refund of ITC - Export sale - shipping bill is not trackable on ICEGATE website - drop- shipping transaction - levy of IGST - Export sale or not - HELD THAT:- In the subject case there is no supply of goods undertaken by the applicant the provisions of Section 95 of the CGST Act will be applicable, in view of which the application is non-maintainable and liable for rejection. The present application filed for advance ruling is rejected, as being non-maintainable as per the provisions of law.
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2020 (2) TMI 535
Maintainability of Advance Ruling application - Export of services or not - services for providing Cargo Handling Services for its goods imported into Nepal from Vietnam - HELD THAT:- As per the Section 97(2) of CGST Act, the questions on which advance ruling is sought under this Act, shall be in respect of, matters or issues mentioned in Section 97 (2) (a) to (g) only - the place of supply of services does not find mention in the said Section 97 mentioned above. The present application filed for advance ruling is rejected, as being non-maintainable as per the provisions of the GST Act, 2017 and Rules made thereunder.
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2020 (2) TMI 534
Permission for withdrawal of Advance Ruling application - refund of credit accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies - N/N. 5/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The Application in GST ARA Form No. 01 of M/s. DTL Ancillaries Ltd., vide reference no. ARA No. 49 dated 04.10.2019 is disposed of, as being withdrawn voluntarily and unconditionally.
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2020 (2) TMI 533
Permission for withdrawal of Advance Ruling application - levy of GST - amount collected as membership fees from Local Organization Member (LOM's) is in the nature of affiliation fees which is applied for the purpose of meeting the objects of the trust such as various administration expenses, etc. - other incomes received by the Trust. HELD THAT:- The Application in GST ARA Form No. 01 of M/s. Junior Chamber International India, vide reference ARA No. 43 dated is disposed of, as being withdrawn voluntarily and unconditionally.
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2020 (2) TMI 532
Maintainability of Advance Ruling application - levy of GST - sale of shop which is 44 yrs old - Liablity of GST, on lessor to the lessee / or any other person? - HELD THAT:- Section 95 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. We find that the applicant has not undertaken the supply in the subject case. In fact, the applicant is a recipient of property in subject transaction. Thus, the condition under Section 95 is not satisfied by the applicant and hence, the issue is not within purview of this authority. The impugned transactions in not in relation to the supply of goods or services or both undertaken by the applicant and therefore, the subject application cannot be admitted. The subject application for advance ruling made by the applicant is rejected under the provisions of sub-section 2 of Section 98 of the CGST Act, 2017.
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2020 (2) TMI 530
Form GSTR 3B not filed - period from May 2018 till December 2019 - HELD THAT:- Petitioner undertakes to pay the GST liability in installments - Let NOTICE be issued to the respondents returnable on 05.03.2020. By the next returnable date i.e. 05.03.2020, the writ-applicant is directed to deposit an amount of ₹ 42,63,031/- in terms of his under on oath.
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2020 (2) TMI 529
Stay on implementation and operation of the impugned sealing memos in relation to the Godown - the godown is used for the purpose of storing agricultural produce like cotton bales and cotton yarn - grievance of the writ applicant is that he, being the owner of the godown, the seal which has been affixed, cannot be for an indefinite period of time. HELD THAT:- Section 67(2) and 67(4) of CGST Act makes it clear that if the proper officer, not below the rank of Joint Commissioner, either pursuant to a search carried out under sub-section (1) or otherwise has reasons to believe that any goods liable to confiscation or any documents or books, which in the opinion of the proper officer, may be useful or relevant to any proceedings which may be undertaken or such goods are liable to be secreted to any place, then the proper officer may authorize in writing any other officer of the State Tax to search and seize the goods, documents or books or things. Clause (4), referred to above, empowers the authorized officer to seal or break open the door of any premises where access to such premise is denied. In the case on hand, we have not been shown anything to indicate that the proper officer had any reasons to believe that the goods stored in the godown in question are liable to confiscation. However, for the time being, we are not going into this issue. We are trying to find a way out, by which, the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law. Writ application is disposed off with certain directions issued.
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2020 (2) TMI 525
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 524
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 523
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 522
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 517
Constitutional validity of the 3rd proviso to Rule 138(1) and Rule 138(5) read with Section 129 of the CGST Act - tax demand and imposition of penalty for the discrepancy/invalidity of E-way during movement for job work - HELD THAT:- We are inclined to issue notice to the respondents with a view to resolve the controversy as highlighted. Let Notice be issued to the respondents returnable on 12.02.2020.
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2020 (2) TMI 516
Second bail application - evasion of tax - It is contended that petitioner has sold the goods without generating the Outward supply invoice and has thus evaded tax - HELD THAT:- The offence as alleged in the FIR is under Section 132(1)(a) read with Section 132(1)(h), (j) and (k) of the Rajasthan Goods and Services [Tax] Act, 2017, the maximum sentence provided under Section 132(a)(i) is five years. From the E-way bills produced with the charge-sheet, it is revealed that the total Inward supply was to the tune of ₹ 133 crores which included the import of ₹ 108 crores made by the petitioner. In the charge-sheet itself, the report of fire made to the police and the fire brigade is also available which goes to show that fire took place in the factory premises of the petitioner. Petitioner has already furnished the bond with regard to import of ₹ 108 crores and in case the export is not made within eighteen months, he is liable to pay in accordance with bond executed by him. Petitioner has remained in custody for a period of more' than five months. No notice with regard to tax outstanding has ever been issued to the petitioner. The second bail application allowed.
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Income Tax
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2020 (2) TMI 547
Disallowance made on account of depreciation claimed on infrastructure facility - HELD THAT:- This tax appeal is admitted on Question No.2A, which reads thus; (A) Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance made on account of depreciation claimed on infrastructure facility amounting to ₹ 5,69,94,451/- without properly appreciating the facts of the case and the material brought on record?
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2020 (2) TMI 546
Exemption/approval u/s 10(23C)(vi) - denial of registration under Section 12AA - whether assessee's stated objects does not aim to have its activities 'solely for education', which is one of the main condition for granting approval u/s 10(23C)(vi)? - ITAT allowed exemption - HELD THAT:- From the perusal of the paper book, it is evident that one of the factor considered by the CIT (E) was denial of registration under Section 12AA of the Act. It would be pertinent to note here that while dealing with the issue of Section 12AA of the Act, the Tribunal dealt with the objection with regard to amassing capital fund and fixed assets. It was concluded that corpus created and the land and building was acquired out of donations, for setting up the school. Further, the point of fee receipt was also considered and it was held that the same was spent for running the school. The only issue raised by learned counsel for the Revenue needs to be considered is that the object to work for social, moral, intellectual upliftment of general public especially women brings the object of the assessee out of the phrase solely for educational purpose . The contention raised is not well founded. From the objects quoted above, it is forthcoming that the assessee was promoting quality education in the rural areas and managing the affairs of Sadhu Singh DAV, Rural Public School, Mukandpur. The object for upliftment of general public especially women is only with regard to its sole object of educational purpose only, as the intellectual upliftment of general public especially women can only envisage education and nothing else. In view of the above discussion, no interference is called for in the conclusion arrived at by the Tribunal.-Decided against revenue.
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2020 (2) TMI 545
Exemption u/s 11 - refusing to grant the Registration u/ s 12AA - Appellant is not registered under the provisions of the MP Public Trust Act, 1951 - Whether ITAT is correct in holding that a public charitable Trust does not require to comply with local law of MP requiring registration under MP Public Trust Act 1951 ? - HELD THAT:- In the present case, the registration was applied for by the respondent under Section 12AA(1)(b)(i) of the Act and the provisions under Section 12AA(1) of the Act also refers to the trust or institution and there is no mandate under Section 12AA of the Act that the application seeking exemption is required to be applied only by a registered Trust or Institution under the local laws i.e. M.P. Public Trust Act, 1951. Tribunal considering the provisions of Section 12AA(1) of the Act has specifically held that for registering the Trust or Institution for the purposes of the said Act, the Principal Commissioner or Commissioner, is required to satisfy itself about the objects of the applicant Trust or Institution and the genuineness of its activities. Under the said provision, there is no requirement for a Trust to be mandatorily registered as a Public Charitable Trust under the local Act. In the absence of any provision requiring registration as a Public Charitable Trust before applying for registration under Section 12AA(1) of the Act, the findings arrived at by the learned Tribunal cannot be faulted and said to be illegal or perverse in any manner. No reason to take a different view from the one taken by the learned Tribunal as there was no statutory requirement under the Act for the assessee Trust to get itself registered under any law before applying for registration. No infirmity could be found in the order of learned Tribunal warranting interference - No substantial question of law
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2020 (2) TMI 544
Disallowance on account of salary expenditure - failure of the assessee to furnish the relevant details and documents - addition sustained by the ld. CIT(Appeals) to the extent of 90% - HELD THAT:- In view the factum and quantum of these investment activities carried on by the assessee-company during the year under consideration, which is duly taken note of by the Assessing Officer in paragraph no. 2.1 of the assessment order and having regard to the fact that the status of the assessee being a Company, which is required to comply with the statutory requirement, we are of the view that the disallowance of 90% of the expenditure claimed by the assessee on account of salary and bonus as sustained by the ld. CIT(Appeals) is highly excessive and unreasonable. According to us, it would be fair and reasonable in the facts and circumstances of the case to restrict the disallowance made by the Assessing Officer on account of salary and bonus to 50%. We accordingly modify the impugned order of the ld. CIT(Appeals) on this issue and restrict the disallowance made by the Assessing Officer on account of salary and bonus to 50%. - Appeal of the assessee is partly allowed.
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2020 (2) TMI 527
Recovery proceedings - membership right - priority of Income tax Department over Stock Exchange - prohibitory and attachment orders issued by the Income Tax Department in respect of the income tax dues payable by card holders of the Bombay Stock Exchange in the hands of the petitioner - HELD THAT:- As decided in [ 2016 (12) TMI 1814 - BOMBAY HIGH COURT] it is agreed position between the parties that the decision of the Apex Court in Bombay Stock Exchange Vs. V.S. Kandalgaonkar Ors. [2014 (10) TMI 368 - SUPREME COURT] cover both the issues in principle in favour of the petitioner. The Apex Court has held that the membership card is only a personal privilege granted by the petitioner - Exchange and that no right to that card has ever been transferred to the card holder for the petitioner - Exchange so as to enable it's attachment by the Income Tax Department. So far as security deposit is concerned, the Apex Court has held that the petitioners would have a priority on the security deposits over the Income Tax Department.
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2020 (2) TMI 520
Allowable expenses u/s 37 - Disallowances of foreign travel expenses - addition made on estimated variation in consumption of raw material and contribution Made to one Lady Ampthill Hospital - HELD THAT:- The findings of facts are rendered by the learned Tribunal upholding the findings of the two Authorities below and thus, all the three Authorities have concurrently held against the Assessee that only for want of production of relevant evidence by the Assessee, the Authorities below came to the conclusion that the expenses incurred by the Assessee on various items as well as the contribution made to Lady Ampthil Hospital were not allowable expenses and the additions made on variation in the raw materials and production was also justified and unless such findings rendered by the Tribunal are found to be perverse by this court, the Appeals under Section 260A of the Act are not maintainable. - Decided against assessee.
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2020 (2) TMI 519
Large scale tax evasion - Petitioner seeking permission to travel abroad as well as stay of the lookout circular issued against the petitioner for conducting business affairs - HELD THAT:- The perusal of the status report, however, reveals that there are allegations of large scale tax evasion. The report prima facie reveals that petitioner is promoter of the Group and Director in the same companies of the Group who have indulged in large scale tax evasion. The Group has also obtained large scale credit facilities in different names from the banks based upon fictitious transactions. The petitioner has not been co-operating with investigating agency and has been evasive during interrogation. Keeping in mind the fact that petitioner was the main person controlling/ directing affairs of the group within and outside India and there is large scale tax evasion and investigation is still in progress and there is a strong apprehension that petitioner may not return and, thus, will not be available for investigation, he cannot be granted permission to travel abroad at this stage. The application of the petitioner for seeking permission to travel abroad is, therefore, dismissed and stands disposed of accordingly.
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2020 (2) TMI 518
Validity of Appeal - alternate remedy - reopening of assessment - regular Appellate remedy available to the Assessee against the impugned Reassessment Order - HELD THAT:- Single Judge ought to have upheld the objection of the Revenue and relegated the Assessee to the regular Appellate remedy available to the Assessee against the impugned Reassessment Order under Section 147/148 of the Act for the Assessment year 2008-09. Assesseealso fairly submitted before us that even at this stage, the Assessee may be allowed to avail his remedy by way of appeal before the First Appellate Authority viz., CIT (Appeals), to which the learned Counsel for Revenue Ms.Hema Muralikrishnan also does not have a serious objection. We are inclined to accept the said submission of the learned Counsel for the Assessee and the Revenue, accordingly, we allow the present appeal of the Revenue and set aside the order passed by the learned Single Judge and we direct that, if the Assessee prefers a regular appeal before the learned CIT (Appeals) for the Assessment year 2008-09 against the impugned re-assessment order dated 2 March 2016 for the Assessment year 2008-09, within a period of four weeks from today, then, without raising any objection with regard to the limitation, the learned CIT (Appeals) may entertain the said appeal, and decide the same on merits and in accordance with law, subject to fulfillment of other conditions, as may be imposed by it. Appeals of the Assessee may be decided independently, uninfluenced by any of the observations made by the learned Single Judge in the order impugned before us.
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2020 (2) TMI 513
Reopening of assessment u/s 147 - change of opinion - HELD THAT:- No justification to interfere with the Order of the Ld. CIT(A). It is a fact that original assessment was completed under section 143(3)of the I.T. Act, 1961. The assessee furnished complete details before A.O. at original assessment stage which includes list of donors etc., for completion of the assessment under section 35(1)(ii) of the I.T. Act. No new material was brought on record at the time of reopening of the assessment. The A.O. merely on the basis of the material already on record recorded reasons for reopening of the assessment. There is no failure on the part of the assessee to produce complete details at the original assessment stage. The crux of the findings of the Ld. CIT(A) clearly show that Ld. CIT(A) was satisfied with the explanation of assessee that it is not a fit case of reopening of the assessment, though no specific operative finding have been given in this regard. Ultimately, the Ld. CIT(A) allowed the appeal of assessee. Since assessee has raised point of reopening of the assessment and find merit before the Ld. CIT(A), therefore, it would show that the grounds of appeal raised by the assessee for reopening of the assessment has also been allowed. The Revenue has taken adjournment on 08.07.2019 seeking time to file revised ground of appeal. Though the revised grounds are filed, but, again no ground have been taken to challenge the quashing of the reassessment proceedings in the matter. The assessee for abundant precaution has filed application under Rule 27 of the I.T. Rules. The crux of the findings of the Ld. CIT(A) clearly show that it is a case of mere change of opinion and that re-assessment have been made after four years from the end of the relevant assessment year, after passing of the original assessment order under section 143(3) of the I.T. Act, 1961. There is no failure on the part of assessee to disclose all the facts truly and correctly which are required for passing of the assessment order. Appeal of Revenue would not be maintainable because no ground have been raised by the Revenue challenging the reopening of the assessment, despite giving sufficient opportunity to the Revenue. Further there is no merit in the appeal of the Revenue because complete details required for completion of the assessment were filed at the time of original assessment. Therefore, the issue is covered by Judgment of Hon ble Supreme Court in the case of CIT vs., Nagpur Hotel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT] - Decided against revenue.
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2020 (2) TMI 512
Levy of penalty u/s 271(1)(c) - unexplained investments in construction of building, on receipt of valuation report from the DVO - Non striking out the irrelevant portion of the show cause notice u/s 274 - HELD THAT:- As seen from the notice, the A.O. has not struck out the irrelevant portion in the above notice. It is not clear whether he has levied the penalty for concealment of particulars of income or furnishing of inaccurate particulars of income . By reading of the penalty order also, it is not clear that whether he has levied the penalty for concealment of income or furnishing inaccurate particulars of income. Hence, the ratio laid down by the ITAT Cochin Bench in the case of M/s.R.R. Holidays Homes (P) Ltd. [ 2019 (12) TMI 401 - ITAT COCHIN] clearly applies Inclined to confirm the deletion of penalty by the CIT(A) in all the assessment years. Further, I also make it clear that the CBDT Circular No.3/2018 clearly applies to the present case of the assessee. There is no merit in the argument of the learned DR that the assessee is not covered by the CBDT Circular in view of para 10(d) of the above Circular. In my opinion, in the present case, the penalty was levied by the Assessing Officer on account of unexplained investments in construction of building, on receipt of valuation report from the DVO and further the addition is not related to any items mentioned in para 10(d). Being so, the department is precluded from filing the appeal in view of the monetary limit of filing the appeal before the Tribunal is ₹ 50 lakh, as prescribed by the CBDT. There is no useful purpose would be served in remitting the appeals to the files of the CIT(A). In the totality of the facts and circumstances of the case, we are inclined to confirm the order of the CIT(A) in deleting the penalty for all the assessment years. - Decided against revenue
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2020 (2) TMI 511
CIT(A) allowing additional evidence without intimating to the AO - violation of rule 46A - HELD THAT:- In the present case, we are dealing with a situation as envisaged under rule 46A(1). It is evident from the facts on record, learned Commissioner (Appeals) on his own has neither made any enquiry nor has called for any evidences from the assessee. It is the assessee who, on his own, has furnished the additional evidences to explain the information contained in CIB/AIR report. Therefore, the procedure laid down in sub rule (2) and (3) or rule 46A, has to be followed. In the facts of the present case, undisputedly, the procedure laid down in sub rule (2) and (3) of rule 46A, have not been followed. While granting relief to the assessee by relying upon the additional evidences, learned Commissioner (Appeals) has violated the conditions of rule 46A, as discussed above. As regards the decision of the Hon'ble Jurisdictional High Court in Smt. Prabhavati S. Shah [ 1998 (2) TMI 107 - BOMBAY HIGH COURT] there cannot be two opinions with regard to the ratio laid down in the aforesaid decision. However, the Hon'ble Jurisdictional High Court was dealing with a case where the first appellate authority refused to admit the additional evidences filed by the assessee. In that context, the Hon'ble Jurisdictional High Court explaining the power of the first appellate authority under section 250(4) and (5) of the Act, held that the additional evidences filed by the assessee should not be rejected as the power of the learned Commissioner (Appeals) in making enquiry and calling for evidences is much wider and is not restricted by rule 46A - we are inclined to set aside the impugned order of learned Commissioner (Appeals) and restore the issue back to his file for fresh adjudication after necessary compliance with the provisions of rule 46A. Grounds are allowed. Revenue s appeal is allowed for statistical purposes.
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2020 (2) TMI 510
Undisclosed investment in construction of Hotel premises u/s 69B - HELD THAT:- We agree with the fact that suitable opportunity have been provided by the Assessing Officer as well as by the ld. CIT(A), at the same time, given fact that the Karta of the assessee HUF who was handling the matters has since expired on 17.04.2014 and being a family run business, the challenges in transition of the business affairs to the next generation and in attending to the various proceedings cannot be ruled out. As highlighted by the ld AR, we find that there are various entries in the loose excel sheets in the form of cash deposits, partner drawings, repayment of loan and entries relating to double counting which prima facie are not in the nature of expenditure on construction of the hotel and thus cannot be considered as unexplained investment u/s 69B - There are submissions filed by the assessee before DDIT (Inv-II), Jaipur explaining the source of such investment in the hotel which has also not been considered by the Assessing officer. We set aside the matter relating to undisclosed investment in construction of Hotel premises u/s 69B of the Act to the file of the Assessing Officer to examine the same afresh as per law without getting influenced by our prima facie observations as noted above.- Appeal of assessee are partly allowed for statistical purposes.
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2020 (2) TMI 509
TP Adjustment - Addition towards compensation for advertisement, marketing and promotion (AMP) expenses - HELD THAT:- As relying on assessee's own case [ 2019 (10) TMI 1070 - ITAT KOLKATA] we delete the addition made by AO/TPO on account of compensation for advertising, marketing and promotion expenses (AMP Expenses). Therefore, ground raised by the assessee is allowed. Determining arm s length price of intra-group services in respect of support services received from its AEs as Nil - HELD THAT:- As relying on assessee's own case [ 2019 (10) TMI 1070 - ITAT KOLKATA] we restore this issue back to the file of the A.O/TPO. Therefore, grounds raised by the assessee is allowed for statistical purposes. Transfer pricing adjustment towards contract research and development services rendered to the AE - HELD THAT:- As decide on assessee's own case [ 2019 (10) TMI 1070 - ITAT KOLKATA] Adjustment made by TPO towards contract Research Development Service (Contract R D) rendered to the AE is erroneous for not taking into consideration the Tribunal s decision in assessee s sister concern M/s. Akzo Novel Car Refinishes India Pvt. Ltd. wherein the Tribunal while adjudicating similar issue has excluded Pharma Companies from the list of comparables and which action of Tribunal has been followed by the Ld. DRP in assessee s own case for AY 2014-15. If that is the case, then we are inclined to set aside the impugned order and remand the issue back to the Ld. TPO for fresh consideration Transfer pricing adjustment towards research training expenditure provided by the assessee to its AE for development and improvement of product of AEs - HELD THAT:- As relying on assessee's own case [ 2019 (10) TMI 1070 - ITAT KOLKATA] we delete the addition made by AO/TPO on account of transfer pricing adjustment towards research training expenditure provided by the assessee to its AE for development and improvement of product of AEs. Therefore, ground raised by the assessee is allowed. Disallowance of expenses u/s 37(1) - said expenses are not in the nature of advertisement and publicity - HELD THAT:- Revenue submitted that since the assessee has failed to produce the evidence/documents relating to these expenses during the assessment stage therefore the Assessing Officer could not verify the nature of these expenses whether they are under the head of advertisement and publicity or whether they will fall under the ceiling of distribution expenses. Therefore, we are of the view that one more opportunity should be given by the assessee to explain the nature of these expenses before the Assessing Officer and therefore we direct the Assessing Officer to examine these expenses and adjudicate the issue in accordance with law. The ld. DR has no objection if the issue is remitted back to the file of Assessing Officer. Therefore we set aside the order of ld. DRP/A.O on this particular issue and remit the issue back to the file of the Assessing Officer to examine these expenses and adjudicate the issue in accordance with law. For statistical purposes, this ground of the assessee is allowed. Disallowance of expenditure u/s 14A - HELD THAT:- ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT [ 2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by the Hon'ble Calcutta High Court in the case of REI Agro Ltd. [ 2014 (4) TMI 713 - CALCUTTA HIGH COURT] . Therefore, we direct the AO to compute the disallowance under rule 8D(2)(iii) of the rules by taking into account dividend bearing securities. Disallowance of expenditure u/s 14A of the Act while computing book profit u/s 115JB - HELD THAT:- The provisions of section 115JB relating to computation of book profit are amply clear and unambiguous. These provisions do not leave any room for adjustment by the assessing officer other than those mentioned in Explanation 1 to section 115JB to the net profit reflected in the accounts of any assessee and adjustment by way of disallowance u/s 14A is not included in the said explanation. This issue is also covered by the judgment of the Special Bench of Tribunal in the case of ACIT Vs. Vireet Investments (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] . Therefore, we direct the AO/TPO not to consider disallowance u/s 14A, while computing book profit u/s 115JB of the Act.
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2020 (2) TMI 508
Exemption u/s 35(2AB) denied - Penalty u/s 271(1)(c) - there was no approval in form No. 3CM - Addition on the ground that, although, the R D facilities were recognized by the DSIR, but for the purpose of tax exemption it has to be approved by the competent authority i.e The Secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India. - HELD THAT:- The recognition was valid from 01.04.2001, and which was available during this period. Assessee facility was approved by the competent authority i.e the Secretary DSIR, but there was no approval in form No. 3CM for the impugned Assessment year. From the settled legal position of the law by the various cases of High Courts as discussed what is relevant to decide eligibility for weighted deduction u/s 35(2AB) is existence of R D facility and recognition of such facility by the competent authority. Once the facility has been approved by the competent authority, then there is no cut off date is prescribed for approval of such facility and the benefit of deduction u/s 35(2AB) of the Act, should be given to the assessee as long as the recognition is in force. A.O as well as Ld. CIT(A) were incorrect in denying the benefit of weighted deduction claimed u/s 35(2AB) of the. Hence, we direct the A.O to allow weighted deduction claimed u/s 35(2AB) Penalty u/s 271(1)(c) - once addition on which penalty levied u/s 271(1)(c) of the Act, has been finally deleted by the appellate authorities, then there is nothing survives to levy penalty u/s 271(1)(c) of the Act. Hence, we are of the considered view that the penalty levied by the A.O u/s 271(1)(c) of the Act, cannot survive in the eyes of law. CIT(A) although confirmed additions made by the A.O towards disallowance of weighted deduction claimed u/s 35(2AB) of the Act, but deleted the penalty levied u/s 271(1)(c) on the ground that mere making a claim which was not accepted by the A.O cannot leads to a conclusion that the assessee has furnished inaccurate particulars of income which warrants levy of penalty U/s 271(1)(c) - Decided in favour of assessee.
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2020 (2) TMI 507
Assessment u/s 153A - Whether additions have not been made on the basis of incriminating materials or documents found during Search seizure action u/s 132 ? - unexplained investment - HELD THAT:- Considering the latest judgment of Hon ble High Court of Delhi in the case of Principal CIT Ors V/s Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] come to the conclusion that since the assessment orders in question were concluded and non abated assessments no addition can be made in the assessment proceedings u/s 153A of the Act unless there is any incriminating material found during the course of search. We find no inconsistency in the finding of Ld. CIT(A) quashing the assessment proceedings u/s 153A of the Act since the additions were not made on the basis of any incriminating material found during the course of search. - Decided against revenue.
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2020 (2) TMI 506
Levy interest u/s 234B - addition made in Book Profit under MAT with respect to deduction on export profit u/s 80HHC(3), ignoring the amendment made by the Finance Act 2011 to section 115JB with retrospective effect from 01.04.2005 - HELD THAT:- Liability arising on account of retrospective amendment could not be fastened on the assessee, where the assessee could not have foreseen the liability, at the time of estimating his income for the purpose of payment of advance tax. In this case, additions was made to book profits computed u/s 115JB, towards deduction claimed on eligible profit u/s 80HHC of the Act, on the basis of retrospective amendment to Section 115JB of the Act, by omitting clause (iv) to (vii) to explanation 1 by the Finance Act, 2011 with effect from 01/04/2005. At the time of payment of advance tax, said provisions were very much was on statute, and assessee was entitled to deduct amount claimed as deduction u/s 80HHC from book profit u/s 115JB of the Act. Therefore, the assessee has taken the advantage of provisions as was there in statue at the time of payment of advance tax and hence, the assesee cannot be expected to pay advance tax on the part of disputed amount. No interest can be levied u/s 234B of the Act, for shortfall in payment of advance tax on the basis of retrospective amendment to law. The Ld.CIT(A), after considering relevant submissions of the assessee and also, by following the order of the ITAT in assessee own case for very same AY 2005-06 [ 2016 (6) TMI 300 - ITAT MUMBAI ] has rightly deleted additions made by the Ld. AO towards levy of interest u/s 234B of the I.T. Act, 1961. Hence, we are inclined to uphold the order of the Ld.CIT(A) and dismiss, appeal filed by the revenue.
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2020 (2) TMI 505
Depreciation on intangibles - sale as slump sale and offered profit derived therefrom as Long term capital gain in the return of income filed for the impugned assessment year - HELD THAT:- AO apparently has not obtained such approval of the Joint Commissioner before determining the value of the asset at Nil . Atleast, no such material has been placed before us by the Revenue to show that the Assessing Officer has obtained any approval of Joint Commissioner of Income tax. Even, a reading of paragraph 3.3 of the assessment order reveals that the Assessing Officer by referring to a wrong/incomplete provision has proceeded to exercise his power in determining the value of the asset at Nil . For this reason alone, the disallowance made by the Assessing Officer cannot be sustained. As rightly observed by Commissioner (Appeals), there cannot be any doubt with regard to the genuineness of the transaction as M M Ltd. has treated the sale as slump sale and offered profit derived therefrom as Long term capital gain in the return of income filed for the impugned assessment year. Even, the business transfer agreement also clearly speaks of transferring not only the physical assets but various other intangible assets such as contractual rights, licenses, customer base etc. All these intangible assets transferred to the assessee have a commercial value and a part of sale consideration has to be allocated to such assets. For the purpose of such allocation the assessee has obtained valuation report from a technically qualified person. If the Assessing Officer was not satisfied with the valuation report, he should have got the assets valued through another technically qualified person instead of rejecting the valuation report purely on the basis of conjectures and surmises. Further, the observations of the Assessing Officer that the assessee has designed the transaction in a manner to create fictitious asset is without any material basis. In the case of ACIT vs. Dorma India Pvt. Ltd. (2019 (11) TMI 1139 - ITAT CHENNAI) , the co-ordinate Bench while considering a dispute of similar nature has observed, a consolidated payment made by the assessee over and above net assets acquired by it under a composite contract is to be viewed as towards goodwill and has to be treated as intangible asset on which depreciation is allowable. assessee is eligible to claim depreciation on the intangible assets acquired by way of congeries of rights. Therefore, the order of learned Commissioner (Appeals) on the issue is upheld. The ground raised is dismissed. Allowance of depreciation on goodwill - HELD THAT:- Undisputedly, the depreciation claimed by the assessee is on goodwill. As held by the Hon ble Supreme Court in the case of CIT vs. Smif Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] goodwill is an intangible asset as defined u/s. 32(1)(ii) of the Act, hence, eligible for depreciation. In view of the ratio laid down by the Hon ble Supreme Court as discussed above, assessee s claim of depreciation has been rightly allowed by learned Commissioner (Appeals). Hence, no interference is called for. This ground is also dismissed. Allowance of fees paid towards valuation report - HELD THAT:- Though, it may be a fact that expenditure incurred by the assessee was for valuation of the assets, however, such expenditure, per se, is not for acquiring any capital asset. Therefore, in our considered view, learned Commissioner (Appeals) was justified in allowing assessee s claim. This ground is dismissed. Disallowance of expenditure under the head services/operations - notices issued u/s. 133(6) have returned back un-served - HELD THAT:- As it appears from the orders of the Assessing Officer as well as learned Commissioner (Appeals) due to non-response to the notices issued u/s. 133(6) of the Act, a part of the expenditure has been disallowed and added back. However, it is a fact on record that all payments have been made by the assessee in cheque and the assessee has furnished the name, address, PAN etc., of all payees. In fact, the assessee has also deducted tax in applicable cases, which is evident from the TDS certificates filed in the paper-book. Non-response to the notices issued u/s. 133(6) of the Act could be for various reasons. However, that itself would not lead to the conclusion that the payments made are non-genuine, particularly, when the payments have been made through banking channels. Moreover, considering the nature of business and the turnover involved, we are of the view that the disallowance made is not justified. - Decided in favour of assessee.
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2020 (2) TMI 504
Reopening of assessment u/s 147 - Bogus purchases - AO estimated such profit element @ 12.5% on the bogus purchase - HELD THAT:- Purchases were never examined or verified at the time of processing of return of income under section 143(1). On the contrary, tangible material has come to the possession of the Assessing Officer subsequently revealing escapement of income on account of non genuine purchases. There is no dispute that on the basis of such material, the Assessing Officer has re opened the assessment under section 147 of the Act. That being the case, we do not find any merit in the grounds raised by the assessee challenging the validity of the re opening of the assessment under section 147 of the Act, hence, dismissed Bogus purchases - Both the Assessing Officer and learned Commissioner (Appeals) have proceeded to make the addition on estimate basis makes it clear that they have no doubt with regard to the fact that the goods representing such purchases have been entered in assessee s books of account and corresponding sales have been effected. It is noticed, while deciding identical issue in case of the Karta of the HUF, who is not only in same line of business but had made similar purchases from common entities, the Tribunal [2017 (12) TMI 1667 - ITAT MUMBAI] relating to the Assessment Years 2009 10 and 2010 11 has deleted the additions. - Decided against revenue
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2020 (2) TMI 503
TP Adjustment - adjustment made to the arm's length price (ALP) of provision of Application engineering Service to the Associated Enterprises (AE) - Comparable selection - HELD THAT:- Assessee is into Application Engineering Service thus companies functionally dissimilar with that of assessee need to be deselected. Companies with extraordinary events relating to merger and amalgamation need to be deselected. Arm's length price of payment made to the AEs towards corporate fees - TPO disallowed the payment made towards Intra Group Services (Corporate Fee) primarily on the reason that the assessee failed to furnish required documentary evidences to show that it has received such services from the AEs and further, to show that it has been benefited by such services AND in an arm's length scenario, no independent party would have made such payment to another party - HELD THAT:- In the facts of the present case, though, the Transfer Pricing Officer has mentioned that CUP is the most appropriate method, however, it is very much clear that he has neither applied CUP method as per letter and spirit of rule 10B(1)(a) nor has followed any other prescribed method while determining the arm's length price at nil. In our considered opinion, the Transfer Pricing Officer is not authorized under the statute to do so. Therefore, the adjustment made by the Transfer Pricing Officer with regard to the arm's length price of the Corporate Fee cannot be sustained. Our aforesaid view is well supported by the judicial precedents cited by the learned Authorised Representative. As regards the contention of the learned Departmental Representative for restoring the issue to the Assessing Officer, we are of the view that there is no necessity to do so in the facts of the present case, as all the required evidences relating to the issue are already on record and have been considered by the Transfer Pricing Officer and learned DRP. In fact, after perusing the evidences available on record, learned DRP has recorded a categorical finding that receipt of service is ascertainable. Learned DRP has upheld the action of the Transfer Pricing Officer by merely observing that the benefits received by the assessee is not proved and further the assessee has not proved that such services were really required by the assessee. In our considered opinion, the aforesaid decision of the Revenue authorities cannot be upheld in view of the ratio laid in the judicial precedents cited before us. Accordingly, we delete the addition made on account of adjustment made to the arm's length price of Corporate Fee. Grounds are allowed. Levy of interest under section 234B and 234C, which is consequential in nature, hence, no adjudication is required.
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2020 (2) TMI 502
Reopening of assessment u/s 147 - unexplained investment - HELD THAT:- AO proceeded to initiate the proceedings under section 147 after receiving some reliable information from the outside source. As such, the AO after receiving the information verified the balance sheet of the assessee wherein the investment was shown at ₹ 1.43 crore. AO after receiving the information applied his mind by referring the balance sheet of the assessee and after that recorded his satisfaction u/s 147 - the allegation of the assessee that there is change of opinion is not sustainable. Accordingly we do not find any merit in the argument of the learned AR for the assessee. Hence the additional ground of appeal of the assessee is dismissed Addition u/s 69 on protective basis - It is necessary to ascertain the fact of the final outcome of substantive addition in the hands of other companies before reaching to the conclusion in the present case. But no such detail is arising from the order of the authorities below. We also note that the assessee has filed certain additional/new evidences to justify the source of investment in the companies as discussed above which were not accepted by the learned CIT (A). These additional/new evidences were not admitted by the learned CIT (A) as the assessee has not given any reasonable reason for not filing the same before the AO during the assessment proceedings. In this regard, we note that there is a procedure prescribed under rule 46A of income tax rule for furnishing the additional evidences. But the assessee has not complied the same. In the present facts of the case, admittedly the assessee has disclosed the investments in its books of accounts. Thus the question arises whether the addition can be made to the total income of the assessee under section 69 of the Act on account of such investments which was disclosed in the books of accounts. But, we do not want to comment on the same for the reason that 1st of all it is necessary to ascertain the status of the substantive assessment made in the hands of the companies as discussed above. Entire issue needs to be examined afresh by the AO as per the provisions of law and in the light of the above stated discussion. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
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2020 (2) TMI 500
Bogus purchases - admissibility of additional evidence - HELD THAT:- As gone through the entire case records including order of AO and the order of CIT(A) and noted that only documents not produced by assessee was inward and outward register, which has already corroborated the purchases and sales supported by bills and invoices including challans and lorry receipts. Hence, in our view, we find that the CIT(A) has accepted the books of account because there was no defect pointed by the AO in the books of accounts and moreover, each and every details were produced by assessee before the AO during assessment proceeding, which was considered by CIT(A) in detail. Hence, we confirm the order of CIT(A) accepting the book results and this issue of Revenue s appeal is dismissed. Addition u/s 41(1) stating that the liabilities still exists - HELD THAT:- We noted that even at the time of assessment proceedings the company was before BIFR for its revival and the revenue was aware of the BIFR proceedings as it had objected to the relief sought under the DRS by the company. The assessee has furnished complete party wise and age wise details of sundry creditors aggregating to ₹ 30,91,95,000/- and these were outstanding as on date and had not ceased to exist or were written off by the assessee. Hence, these were very much existing liability and cannot be treated as ceased under section 41(1) of the Act. Hence, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. Carry forward and set off of unabsorbed depreciation beyond 8 years - HELD THAT:- This issue is squarely covered in favour of assessee and against Revenue by the decision of Hon ble Gujarat High Court in the case of General Motors India (P). LTD. [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] - Decided against revenue.
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Benami Property
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2020 (2) TMI 543
Benami property - relief sought by the applicant under Order XII Rule 6 of the CPC - application filed by Smt.Indu Kamboj [defendant no.9 ] for a direction upon the plaintiff to delete certain properties from the schedule of properties in this partition suit - applicant s contention is that the property is her self-acquired property and is not susceptible to partition at the instance of the plaintiff - whether character of the properties in question as self-acquired properties of the applicant? - HELD THAT:- Plaintiff joined the business, commenced by his father in the year 1975, in which the defendant nos. 1 and 2 and late Sh.Narender Kumar Kamboj also participated. The expansion of the business resulted in the acquisition of various properties. According to the plaintiff, the brothers did not maintain separate accounts and the properties were purchased by their father in the names of his aforesaid sons. Properties were purchased in the names of one or the other member of the family, for the benefit of the entire family. Although Mr. Srivastava is right in saying that the plea with regard to the fiduciary capacity in paragraph 27 of the plaint is in respect of the brothers of the plaintiff, paragraph 40 of the plaint clearly indicates that the properties were purchased inter alia in the name of the applicant, who is the wife of defendant no.1. The averment in paragraph 38 of the plaint that the parties are holding the properties in trust of each other, is also relevant in this regard. Whether the applicant is entitled to the relief claimed in terms of Order XII Rule 6 of the CPC must be decided on a meaningful and holistic reading of the pleadings, or other documents in which the plaintiff is alleged to have admitted the applicant s defence. To entitle a party to a decree in terms of Order XII Rule 6 of the CPC, the admission must be categorical, unconditional and unequivocal. Pleading in respect of a joint Hindu family, where property is held as a trustee for all family members, could not be decided at the stage of an application for rejection of plaint and ought to be taken to trial. The relief of declaration sought in prayers A and B are questions that would in any effect fall for consideration while adjudicating the question of partition. It therefore cannot be held that, on the admitted facts, the plaintiff s claims are barred by virtue of Article 58 to the Schedule of the Limitation Act, 1963. Limitation being a mixed question of law and fact, the point is therefore reserved for final adjudication in the suit. Conclusion - We do not consider this to be an appropriate case for grant of the discretionary relief sought by the applicant under Order XII Rule 6 of the CPC. The application is therefore dismissed. However, it is made clear that the observations contained in this order are not intended to prejudice the case of the parties at the final adjudication of the suit.
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Customs
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2020 (2) TMI 528
Detention of goods - over-valuation of goods - petitioner has also preferred an application for provisional release of the goods - HELD THAT:- Supreme Court has in its recent decision in THE STATE OF UTTAR PRADESH ORS. VERSUS M/S KAY PAN FRAGRANCE PVT. LTD. [ 2019 (12) TMI 95 - SUPREME COURT] has criticized the practice of writ Courts directing release of the seized goods where the statute provides for provisional release. The respondents are directed to decide the application of the petitioner for provisional release of the goods in question in accordance with the rules, regulations and Government policies applicable to the facts of the case - petition disposed off.
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2020 (2) TMI 521
Imposition of fine and parallel penalty - alleged sale of 254 sewing machines out of the imported lot of 554 machines - HELD THAT:- Since two parallel proceedings were drawn against the Assessee on similar set of facts and one with the D.G.F.T., Department has resulted in favourable order at the hands of the competent authority under the Foreign Trade Development and Regulation Act, 1992, those facts and circumstances of the case deserve to be taken into account by the competent authority viz., Commissioner of Customs under the provisions of the Customs Act, 1962. The Commissioner of Customs to decide the issue of imposition of fine and penalty de-novo uninfluenced by the order passed by the learned Tribunal, taking into account the subsequent circumstances which had developed in the case.
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Corporate Laws
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2020 (2) TMI 501
Striking off of name of the appellant company from the Register of Companies - proceedings under Section 560 of the Companies Act 1956 - HELD THAT:- Undisputedly the appellant company has not filed the financial statements and returns since 2006 onwards. Therefore, ROC after serving the notice on appellant company has struck off the name of the company assuming that the company is not carrying on any business or operation - Except the failure to file the financial statements and returns, there is no complaint against the appellant company. Appellant has placed on record the annual returns for the year 2006 onwards till 2017. The appellant company is having asset and due to personal difficulties of the Directors they could not start business. In such circumstance, the order passed by National Company Law Tribunal is not sustainable in law - name of the appellant company be restored to the Register of Companies subject to the following compliances.
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Securities / SEBI
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2020 (2) TMI 538
Inordinate delay in initiating the proceedings - Self trades and match trades - unfair trade practices - Regulation 3 and 4 of the PFUTP Regulations - penalty under Section 15HA of the SEBI Act - HELD THAT:- Respondent had investigated the scrips of Shree Global Tradefin Ltd. for the period March 1, 2009 to January 10, 2011 in September 2011. Pursuant thereto, a show cause notice dated April 20, 2012 was issued for the violation found during the investigated period March 1, 2009 to November 30, 2009. The respondents thereafter waited for another five years to issue a second show cause notice dated July 20, 2017 for the investigated period April 1, 2010 to January 10, 2011 which had been investigated in September 2011. We find that the respondents were aware of the alleged violation and thus there is no justification for waiting for more than five years to issue the second show cause notice dated July 20 2017. In our view there is an inordinate delay in initiating the proceedings. Without going into the question of res judicata or estoppel raised by the appellants we are of the opinion that on account of the inordinate delay in initiating the proceedings, the impugned penalty order cannot be sustained. Even on merits, we find that during the investigation period the observed variations in prices as well as of quantities traded are less than what was the trend during the pre-investigation period. Table at page 3 of the impugned order gives these details. Similarly, we also note that the percentage of matched trades are negligible except in respect of 2-3 appellants. Given these facts the alleged intention to manipulate becomes a weak ground for issuing a second show cause notice after considerable delay.
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Insolvency & Bankruptcy
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2020 (2) TMI 542
Withdrawal of the Company Petition - recall of CIRP ordered - HELD THAT:- During the hearing it is submitted by the Operational Creditor and by the Corporate Debtor that all the disputes between the parties have been amicably settled, the prayer sought in the MA may be considered favourably and the relief be granted on an urgent basis. Considering the facts and circumstances, the submission made and the available record, we are of the considered opinion that the prayer sought by the IRP in the current MA be allowed. The CIRP initiated is recalled and IRP is discharged from his role as IRP - the IRP is further directed to hand over the records/books to the management of the Corporate Debtor. Application disposed off.
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2020 (2) TMI 498
Voluntary Liquidation and Dissolution of applicant company - Section 59 of the IBC 2016 - HELD THAT:- The Petitioner Company does not have any pending litigations or any outstanding debts or liabilities which could impact its financial position, further, proper books of account of the company as per law have been maintained, the company did not have any long-term contracts including derivatives contracts for which there were any foreseeable material losses and that there are no amount require to be transferred to the creditors/ debtors by the company. The petitioner Liquidator has duly complied with the prescribed procedure seeking for voluntary liquidation and dissolution of the petitioner company. It is also found that affairs of the company are completely closed down and the assets of the company have been completely liquidated. Thus, the petitioner company stands wound-up. The Petitioner Company deserves to be dissolved - petition allowed.
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Service Tax
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2020 (2) TMI 515
Nature of activity - manufacture or service - processing and packing of marine products for merchant exporters - whether the activity of the appellant can be termed as taxable service under the provisions of Finance Act, 1994 as Business Auxiliary Service or the activity can be called as a manufacture as defined under the provisions of Central Excise Act, 1944? - HELD THAT:- It is not in dispute that the processes undertaken by the appellant on the marine products are intended to render such products marketable to consumers. Therefore the appellant s activity falls under the definition of manufacture and not as taxable service falling under BAS. Both the authorities have not properly appreciated the processes explained by the appellant vis- -vis the Chapter Note 3 of Chapter 16 CETA, 1985. The definition of BAS is also examined and it is found that the activities carried out by the appellant do not fall under the BAS as defined under Section 65(19) of the Finance Act - Further as far as demand of service tax on renting of immovable property is concerned, we find that if the other activity carried on by the appellant amounts to manufacture, the demand of service tax on renting of immovable property amounting to ₹ 3,59,574/- will fall in the threshold limit and is exempt and the appellant is not liable to pay service tax on that. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (2) TMI 541
Maintainability of appeal - section 35G of the Central Excise Act, 1944, read with section 174 of the Central Goods and Services Tax Act, 2017 - rebate claim - HELD THAT:- A plain reading of the provision of law in section 35-G, being section 35-G(1) of the Central Excise Act, 1944 reveals that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal other than the exceptions as specified in section 35-G (1) only if the High Court is satisfied that the case involves a substantial question of law. Appeal dismissed.
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2020 (2) TMI 514
Refund of excess duty - manufacture of clinker and cement - appellant was required to pay the duty @ ₹ 350 PMT as per the Notification No.4/2007, since there was a confusion during the relevant time, they paid the duty @ ₹ 400 PMT and subsequently filed refund claim - HELD THAT:- In the present case, the appellant has supplied the cement to Government bodies i.e. M/s. AP Housing Corporation, Hyderabad - Further as per the N/N. 4/2007 which prescribes the rates of duty, the appellant s case falls under Sl.No.1A which prescribes the rate of duty @ ₹ 350 PMT. N/N. 4/2007 has prescribed different rates for different categories. Sl.No.1(A) prescribed the rate of ₹ 350/- PMT whereas the sl.No.1(C) prescribed the rate of ₹ 400 PMT. If the conditions laid down under a particular Sl.No. is satisfied, the manufacturer is allowed to manufacture goods prescribed against the said sl.no. Further, in this case, the goods were in packaged form being marked with the RSP and the price being less than ₹ 190 / bag even though the supply was to the Government undertaking and hence the rate applicable is only ₹ 350 PMT and not ₹ 400 PMT at which the appellant has paid the duty. Refund allowed - appeal allowed - decided in favor of appellant.
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2020 (2) TMI 499
Interest on differential payment of duty - price variation clause - matter was earlier repeatedly adjourned for awaiting the decision of Hon ble Supreme Court in the case of Steel Authority of India Ltd. vs. CCE, Raipur. Hon ble Apex Court vide Order dated 07.12.2015 in Steel Authority of India vs. CCE, Raipur [ 2015 (12) TMI 594 - SUPREME COURT ] has already referred the matter to the Hon ble Constitution Bench - HELD THAT:- Keeping in view that the Hon ble Apex Court has decided the controversy involved in favour of the Revenue and against the assessee and also keeping in view the absence of the appellant as on date, I deem it fit to dismiss the appeal not only for want of presence of the appellant but also for no merits in this appeal, as issue stands already decided against the appellant/assessee. Appeal dismissed.
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CST, VAT & Sales Tax
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2020 (2) TMI 531
Recovery of tax arrears under CST Act - charge was created in favour of the respondent Commercial Tax Department against the property of the petitioner's vendor - HELD THAT:- Section 24 of the TNGST Act, 1959 is applicable to the recovery of tax under CST Act, 1956. If an assessee is in default of tax liability, automatically charge is created in respect of the property dealer. Under Section 24-A of the TNGST Act, 1959, a purchaser can claim the defence stating that the purchase was for adequate consideration and without notice of such tax or arrears. In this case, the respondent Commercial Tax Department had not taken the trouble of registering the charge as was required under law. Therefore, the partner of the defaulting dealer took undue advantage and sold the assets unapologetically in a flagrant violation of the law. The petitioner purchased the property from the said person - Impugned notice calls upon the petitioner to pay for the arrears after a lapse almost four years from the date of purchase of the property shows negligence on the part of the Department in as much as the dealer was in arrears of tax from 2010 onwards. Whether the petitioner had indeed paid ₹ 40 lakhs to the vendor without notice of the charge which was created by operation of law or whether the sale was made to defeat the interest of the respondent or bonafide cannot be decided in a writ court as it would require a detailed trial on facts. The petitioner has to satisfy that the requirement of proviso to Section 24-A of the TNGST Act, 1959 has been met to perfect his title to the property - The burden of proof as is required under the aforesaid provision can be established only in a civil court by filing a suit for a declaration and this would require a trial. As the courts exercising jurisdiction under Article 226 of the Constitution of India are not Civil Courts for the purpose of such determination, I am of the view that the present writ petition is liable to be dismissed. Petition dismissed - decided against petitioner.
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2020 (2) TMI 526
Exemption under entry 57(v) of Part B of the Third Schedule to the TNGST Act, 1959 - interstate sales of wheat bran claimed to have been sold by the assessee as cattle feed - Circular issued by the Department dated 25.09.2002 - HELD THAT:- Before holding that the sale of wheat bran by the Assessee under specified conditions of specified circumstances, the Assessing Officer ought to have undertaken the exercise of returning the finding of facts as to whether the wheat bran sold by the Assessee in the course of interstate trade and commerce was a cattle feed or not. Since this exercise was not undertaken, the denial of exemption to the Assessee, without arriving at such finding of facts cannot be sustained. The higher appellate authority also did not seem to have undertaken any such fact finding exercise. The matter deserves to be remanded back to the learned Assessing Authority for undertaking the said exercise of fact finding as to whether the wheat bran sold by the Assessee in the course of interstate sale was a cattle feed or not, which is obviously for the Assessee to establish such facts with relevant evidence before the Assessing Officer - Appeal disposed off by way of remand.
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Wealth tax
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2020 (2) TMI 540
Wealth tax assessment - exemption of 5(vi) for the purpose of self occupied residential property - HELD THAT:- We find that assessee has already exercised the option under Section 5(vi) of W.T. Act in respect of property at Shimla. The option having already been exercised by the assessee in the return; and also the option having not been altered from the assessee s side by way of any revised return to claim the exemption under Section 5(vi) of W.T. Act in respect of Aralias DLF property at Gurgaon; we are of the view that in these facts and circumstances, the contention of the assessee to allow exemption under Section 5(vi) of W.T. Act on account of self occupied property in respect of Aralias DLF property at Gurgaon cannot be permitted at this stage. As both sides have agreed before us at the time of hearing, the Assessee is eligible for deduction on account of loan amounting to the aforesaid ₹ 8,384,306/-. Accordingly, we direct the Assessing Officer to allow deduction to ₹ 8,384,306/- for the purpose of assessing taxable wealth of the assessee. Subject to this direction, the aforesaid enhancement of ₹ 83,62,752/- made by the Ld. Commissioner (Appeals) to taxable wealth, by taking the value of aforesaid Aralias DLF property at Gurgaon at ₹ 1,67,46,763/-is confirmed. Appeal is partly allowed for statistical purposes.
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Indian Laws
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2020 (2) TMI 539
Dishonor of Cheque - Maintainability of complaint - primordial contention of the petitioner is that the complainant Firm is an unregistered Firm, and under Section 69(2) of the Indian Partnership Act, 1932, the unregistered Firm cannot maintain a complaint - HELD THAT:- Admittedly, both the complaints have been filed through a power of attorney, by name G.Veeraputhiran, who was the Internal Auditor of the complainant Firms. Now, the contention of the petitioner is that, the power of attorney did not spell out whether he has any personal knowledge about the transaction between the parties and in the absence of any personal knowledge, he is not competent to file the complaint - It is a settled law that a power of attorney holder can file a complaint, appear and depose for the purpose of issuance of process for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The only restriction is that the power of attorney should have a personal knowledge about the transaction between the parties, and in the absence of any personal knowledge, he cannot depose. The proceedings initiated under Section 14 of the Code noway affects the continuation of the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. Petition dismissed - decided against petitioner.
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