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TMI Tax Updates - e-Newsletter February 18, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws TMI SMS Determination of turnover for tax audit u/s 44AB - AO cannot reject the Guidance Note issued ICAI for one aspect and follow for other aspect Articles NO PROFITEERING WHEN BASE PRICE IS CONSTANT & SELLING PRICE REDUCED News Suresh Prabhu Chairs Board of Trade Meeting GeM and GS1 India Sign MoU to Empower Buyers to Make Informed Choice RBI announces draft directions on facilities for hedging foreign exchange risk by Residents and Non-residents (Amended) RBI releases Draft Directions on Financial Benchmark Administrators Notifications Customs 12/2019 - dated 16-2-2019 - Cus (NT) Amendment in notification No. 95/2018-Cus (N.T.) dated 06.12.2018 relating to AIRs of Duty Drawback GST - States G.O.MS.No. 621 - dated 7-12-2018 - Andhra Pradesh SGST Andhra Pradesh Goods and Services Tax (Twenty-Seventh Amendment be deemed to have) Rules, 2018 G.O.MS.No. 619 - dated 7-12-2018 - Andhra Pradesh SGST Amendment in Notification No. G.O.Ms.No.476 Rev.(CT-II) Dept. Dt.20-09-2018, G.O.MS.No. 618 - dated 7-12-2018 - Andhra Pradesh SGST Supersession of the notification G.O. Ms No.457 Revenue (CT-II) Dt. 16.10.2017 S.O. 29 - dated 11-2-2019 - Bihar SGST Corrigundum - Notification No. 26/2018-State Tax (Rate) dated the 31st December, 2018 S.O. 28 - dated 11-2-2019 - Bihar SGST Corrigundum - Notification No. notification no. S.O. 6 dated the 3rd January, 2019 Order No. 01/2019- State Tax - S.O. 30 - dated 11-2-2019 - Bihar SGST Bihar Goods and Services Tax (Removal of Difficulties) Order, 2019. S.O. 26 - dated 31-1-2019 - Bihar SGST Amendment in Notification No. S.O- 286, dated the 16th November, 2017 S.O. 25 - dated 31-1-2019 - Bihar SGST Amendment in Notification No. S.O.-105, dated the 29th June, 2017 S.O. 24 - dated 31-1-2019 - Bihar SGST Bihar Goods and Services Tax (Amendment) Rules, 2019 S.O. 23 - dated 31-1-2019 - Bihar SGST Governor of Bihar appoints the 1st day of February, 2019, as the date on which the provisions of the Bihar Goods and Services Tax (Amendment) Act, 2018 (14 of 2018), except clause (2) of section 8, section 17, section 18, clause (1) of section 20, shall come into force. 1/2019- State Tax (Rate) - S.O. 27 - dated 31-1-2019 - Bihar SGST Rescind Notification No. 8/2017-State Tax (Rate), dated the 29th June, 2017 S.O. 18 - dated 17-1-2019 - Bihar SGST Amendment in Notification No. S.O. 249 dated the 18th October, 2017 S.O. 17 - dated 17-1-2019 - Bihar SGST Corrigendum - Notification No. 26/2018 State Tax (Rate), dated the 31st December, 2018 S.O. 16 - dated 17-1-2019 - Bihar SGST Corrigendum - Notification No. 24/2018 State Tax (Rate), dated the 31st December, 2018 S.O. 13 - dated 3-1-2019 - Bihar SGST Bihar Goods and Services Tax (Fourth Removal of Difficulties) Order, 2018 S.O. 12 - dated 3-1-2019 - Bihar SGST Bihar Goods and Services Tax (Third Removal of Difficulties) Order, 2018 S.O. 11 - dated 3-1-2019 - Bihar SGST Bihar Goods and Services Tax (Second Removal of Difficulties) Order, 2018 S.O. 10 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O.4 dated the 2nd January, 2018 S.O. 09 - dated 3-1-2019 - Bihar SGST Late fee waived for GSTR 3B for July 17 to September 2018 S.O. 08 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O.124 dated the 23rd January, 2018 S.O. 06 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O.238 dated the 13th September, 2018 S.O. 05 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O.233 dated the 10th September, 2018 S.O. 04 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O. 225 dated the 10th August, 2018 S.O. 03 - dated 3-1-2019 - Bihar SGST Amendment in Notification Nos. S.O.209 dated the 10th October, 2017 and S.O.157 dated the 23rd March, 2018 S.O. 01 - dated 3-1-2019 - Bihar SGST Amendment in Notification No. S.O. 221 dated the 06th August, 2018 30/2018- State Tax (Rate) - S.O. 284 - dated 31-12-2018 - Bihar SGST Insert Explanation in Notification No. 11/2017 – State Tax (Rate), dated the 29th June, 2017 26/2018-State Tax (Rate) - S.O. 280 - dated 31-12-2018 - Bihar SGST Exemption on supply of gold by nominated agency for export of jewellery 25/2018- State Tax (Rate) - S.O.279 - dated 31-12-2018 - Bihar SGST Amendment in Notification No. 2/2017 – State Tax (Rate), dated the 29th June, 2017 24/2018- State Tax (Rate) - S.O.278 - dated 31-12-2018 - Bihar SGST Amendment in Notification No.1/2017 – State Tax (Rate), dated the 29th June, 2017 Circulars / Instructions / Orders SEBI SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/31 - dated 15-2-2019 Advisory Committee at Market Infrastructure Institutions (MIIs) Indian Laws F. No. 01/33/2013-CL.V (Pt.) - dated 15-2-2019 ICAI's announcement regarding clarification on Applicability of Rotation principles on a company as per Section 139 of the Companies Act, 2013 Highlights / Catch Notes GST Levy of GST - business of mining - The applicant has misconstrued the entry which in fact casts a liability of tax to be discharged by the recipient on reverse charge basis on licensing services for the right to use minerals including its exploration and evaluation. Visit to Get Source Man power services to Hospital cum General Medical College and State University (Education Institutions) - Not an exempted service under GST Visit to Get Source Requirement for registration - Renting of property situated in Haryana - place of business to be considered for the purpose of registration - the applicant have rightly taken registration in state of Rajasthan as the supply of transport services is initiated from the state of Rajasthan Visit to Get Source Input tax credit (ITC) - As the supplier of services and place of supply both are outside the state of Rajasthan, hence, Input tax credit of Central Tax paid in Haryana is not available to the applicant. Visit to Get Source Classification of supply - goods/services - the activity of supply, design, installation, commissioning and testing of solar energy based water pumping systems along with construction and O & M work by the applicant is a Works Contract of Composite Supply. Visit to Get Source Eligibility for Advance Ruling - Admissibility of input tax credit of tax paid or deemed to have been paid - In the instant case as the period of activity is past-period i.e. 2017-18 hence, application is not eligible for advance ruling. Visit to Get Source Income Tax Set-off of carried forward depreciation - When such claim could not have been made u/s 32(1), then there is no question of any carry forward of such depreciation for reason of the claim for depreciation having never arisen in that previous year relevant to the previous assessment year. Visit to Get Source Rental income - annual value determination made by the AO merely on the basis of the rent paid by the earlier tenant in the premises - The annual value as available u/s 23 can definitely be assessed on the normal expectation of the rent receivable or received in the relevant previous year. Visit to Get Source Reopening of assessment - consequential demand notice as well as the directions issued under Section 144A - writ petition dismissed. - Assessee is at liberty to file an appeal before an appropriate authority in accordance with law. Visit to Get Source Charitable activity - benefit u/s 11 and 12 - Proviso to Section 2(15) was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions. Visit to Get Source Penalty u/s 271AA - AO has not expressed any difficulty in examining correctness of price adopted by assessee in respect of international transaction with AE. - there is no justification for imposition of penalty u/s 271AA Visit to Get Source Determination of turnover for tax audit u/s 44AB - The A.O. in the assessment order has referred to share trading guidance note on tax audit under Section 44AB of the Income Tax Act published by ICAI, but noted that these have not been recognised by the Department, therefore, same are not binding upon the Department. The A.O, however, taken note of the same and applied to some extent for the purpose of computing the turnover of the assessee. The A.O. cannot go in both ways Visit to Get Source Disallowance on account of remuneration paid to partners of the firm - The partnership deed has specified that the amount of remuneration allowable u/s 40(b)(v) would be the amount of remuneration paid to the partners and same would be shared in their profit-sharing ratio in that year. - conditions are satisfied - Deduction allowed. Visit to Get Source Penalty u/s 271(1)(c) - disallowance of interest expenditure - The findings of the AO may be sufficient to make disallowance in quantum on the theory of preponderance of probabilities but it is not sufficient to fasten and saddle the assessee with penalty provisions as are enshrined u/s. 271(1)(c) Visit to Get Source Addition u/s 68 - cash credit - reliance of statement - creditors had appeared and confirmed the transactions of loans advanced to the assessee. - AO had no valid basis for treating the ‘unsecured loans’ as ‘accommodation entries’. Visit to Get Source Customs Valautaion of imported goods - coating plant - by no stretch of imagination can it be concluded that the payment of US$2 million was a condition for the sale of the coating plant by the supplier to the Respondent - cost not includible in the transaction value of the imported goods. Visit to Get Source IBC Insolvency Resolution - RP raising interim finance - The Employees and the Workmen of the Debtor Company are hereby directed to fully cooperate with the Resolution Professional so that the manufacturing activity as well as other business activity of the Debtor Company should not get hampered in any manner by the conduct of the Workmen/ Employees Visit to Get Source Wealth-tax Inclusion of cash in the wealth tax assessment - cash in hand referred to in section 2(ea)(vi) represents only the personal cash of the assessee emanating from his personal balance sheet. It nowhere contemplated the inclusion of cash which is held as business asset. Visit to Get Source Service Tax Export of service - non-submission of declaration as required under N/N. 39/2012-ST - there is no stipulation in the notification that if the declaration prior to export is not made, then the same cannot be made in a future date or that departmental authority cannot call for the same in a subsequent day. Visit to Get Source Refund of accumulated CENVAT credit - export of service - period of limitation - since under Section 11B it cannot start on any date before the end of the quarter, the same has to be reckoned from next date when quarter ends. Visit to Get Source Valuation - Outdoor catering services - Newspapers supplied by the appellant on behalf of the railways can by no stretch of imagination, be considered to be in the same line of food or food articles - the cost of the newspapers cannot form part of value of ‘catering services’. Visit to Get Source Infrastructure development cost - The term ‘rental’ even in enlarged form of Lease, Rent, Licence, etc., cannot encompass anything done for development of the common facility/ property. There is difference between anything done in relation to ‘renting of immovable property service’ and anything done in relation to ‘immovable property’ per-se, which is in common domain. Visit to Get Source Pre-mature surrender/discontinuance of ULIP - the transaction in question is not a service at all but the transaction in a actionable claim hence could not have been by any stretch of imagination covered under any of the specified taxable heads of service even for the period prior to 01.07.2012 Visit to Get Source Extended period of Limitation - Levy of penalty - short payment of service tax - merely because they had paid the service tax prior to issuance of Show Cause Notice, benefit of period of limitation and wavier of penalty cannot be extended. Visit to Get Source Rectification of error in respect of determination of nature of works contract - It is too immature to take a call about the allegation as that of committing judicial indiscipline as is alleged by the applicant-respondent. Above all, the debatable issue cannot be considered under the garb of the rectification. Visit to Get Source Refund of service tax wrongly paid - GTA service - Once there was no evidence on record to prove that the refund of service tax was with respect to such services as were incurred in relation to agricultural produce only, the adjudicating authority had no option but to reject the claim. Visit to Get Source Renting of immovable property - inherited property - joint owners - demand of service tax on co-owners when the property is jointly owned by them - cannot be treated as association of persons. Visit to Get Source Central Excise SSI Exemption - use of housemark - brand name or not - the monogram in a particular design and in a particular writing being used by M/s. Amtech Electronics (India) Limited much before the incorporation of the appellant company, therefore, the same logo/ monogram used by the appellant is clearly the use of brand name of another company. Visit to Get Source Job work - Reversal of CENVAT Credit - Even though the goods manufactured under Notification 214/86- CE, the CENVAT Credit in respect of inputs used in the said goods is admissible. Visit to Get Source Refund - demand was raised on products which was claimed as exempted by the assessee - assessee paid the demand through cenvat credit - after getting favorable order, refund of cenvat credit sought - refund allowed. Visit to Get Source CENVAT credit - write off of inputs/capital goods on which CENVAT credit availed - obsolete stock - appellant now submits that they have documents to show that they have subsequently used the written off material - facts required to be verified. Visit to Get Source Job work - deemed manufacture - This case of repacking of one type of retail pack into another type of retail pack-assortment pack called “Celebrations” by a job worker cannot be called bulk sale to an intermediary for further sale or distribution in smaller quantities Visit to Get Source VAT Levy of sales tax - inter-state transfer or not? - The goods were also released to the transporter and since the same has not been taken back outside the State through the check post, there is a presumption that it has been sold within the State of Kerala. Visit to Get Source Case Laws: GST 2019 (2) TMI 922 Classification of services - business of mining of Boulders in the State of Haryana - whether classifiable under Tariff Heading 2516 or chapter number 9973 - rate of GST - N/N./ 11/2017-CT (Rate) 28.06.2017 - Held that:- Since, a perusal of classification of services shows that services of right to use natural resources classify under tariff 9973 and since description of services under serial no. 17 (i) to (v) does not cover such services of right to use minerals therefore, it would fall under the residual entry at serial no. 17(viii). Being so, the rate of tax applicable on such services, as provided therein, shall be the same rate of tax as applicable on supply of like goods involving transfer of title in goods. It is evident that service charge by way of annual dead rent or royalty paid for services of granting right to use mineral would attract GST rate as applicable on supply of mineral which is being extracted through such mining - That the minerals which are extracted from the mine are classifiable under Tariff Heading 2516 and leviable to GST @ 5%. The applicant has misconstrued the entry which in fact casts a liability of tax to be discharged by the recipient on reverse charge basis on licensing services for the right to use minerals including its exploration and evaluation. 2019 (2) TMI 921 Man power services to Hospital cum General Medical College and State University (Education Institutions) - exempt from GST or not - Held that:- The provisions of clause (b) of the Sr. No. 66 of notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding notification No. 47/ST-2 Dt. 30.06.2017 of the State tax apply to services provided to educational institutions providing education up-to higher secondary school or equivalent level only. The services provided by the applicant, i.e. Man Power services to Hospital - cum - General Medical College and State University do not qualify for exemption under Sr. No. 66 of notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding notification No. 47/ST-2 Dt. 30.06.2017 of the State Tax. 2019 (2) TMI 920 Whether the Tribunal is constituted or not? - Held that:- List this matter on 28th February, 2019 - On that date in addition to standing counsel some responsible officers of the State from Lucknow as well as G.S.T. Council will appear in this matter. 2019 (2) TMI 919 Requirement for registration - renting of property in different state - place of business to be considered for the purpose of registration - no billing is done from any other state other than Jaipur - registration of vacant lands on lease for parking of trailers/ trucks at various cities for operational purpose - Held that:- The applicant is supplying transport services to various manufacturers to transport their vehicles to the retail outlets in different states. The applicant is fulfilling the condition of clause (a) of Section 2(71) defining “Location of the Supplier of Service”. The applicant is registered in Jaipur, Rajasthan which is his place of business from where he is supplying services in Haryana. The same is also evident from the copy of invoices submitted by the applicant during the personal hearing on dated 04.01.20119 wherein invoices are raised by M/s. Maruti Suzuki, Gurgaon in favour of M/s. K.M. Trans Logistics Pvt. Ltd., Jaipur - Similarly, the applicant is billing and maintains book of accounts at Jaipur only thus also satisfying the condition in clause (b) of Section 2(85) - Further, the applicant is incorporated as a company having its registered office at Jaipur, satisfying condition mentioned in clause (b) of Section 2(113) of CGST Act, 2017. From the facts given by the applicant and on harmonious reading of the Section 22 along with the Section 2(71), Section 2(85) and Section 2(113) of the CGST Act, 2017, it is ascertained that the applicant have rightly taken registration in state of Rajasthan as the supply of transport services is initiated from the state of Rajasthan - The vacant land taken by the applicant is situated in the state of Haryana which is beyond the jurisdiction of this authority. 2019 (2) TMI 918 Input tax credit - admissibility of credit to the applicant who is registered in Rajasthan State, whereby such tax is paid on inward supplies used for business of person registered in Rajasthan and Central Tax paid in Haryana - Held that:- IGST is payable in the case of inter-state supply of goods and services. It is observed that in the GST regime SGST and CGST charged for the services provided and availed in a state would be eligible for ITC within that particular state where such services were provided and consumed. As the supplier of services and place of supply both are outside the state of Rajasthan, hence, Input tax credit of Central Tax paid in Haryana is not available to the applicant. 2019 (2) TMI 917 Classification of goods/services - activity of supply, design, installation, commissioning and testing of solar energy based water pumping systems supply of goods or supply of services - Works contract - composite contract - rate of GST - CBEC Circular 58/1/2002-CX dated 15/1/2002. Held that:- The supply of solar energy based water pumping systems along with its installation, commissioning and operation and maintenance is a single supply - the activity of supply, design, installation, commissioning and testing of solar energy based water pumping systems along with construction and O & M work by the applicant is a Works Contract of Composite Supply. This composite supply is a mixed of goods and services and predominant supply is supply of services. Since this supply is undertaken for a Government Department viz. PHED which is a Government of Rajasthan Department, hence the rate of tax applicable on given service (as it is a works contract service) shall fall under Entry 3(iii) with HSN Code 99544 and it should be IGST @12%(CGST@6%, SGST@6%). 2019 (2) TMI 916 Unable to upload FORM GST TRAN-1 within the stipulated time - input tax credit - migration to GST regime - Held that:- The Government of India has issued Circular No.39/13/2018-GST, dated 03.04.2018, for “setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal - the petitioner may apply to the Nodal Officer, the second respondent. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off. 2019 (2) TMI 915 Eligibility for Advance Ruling - Admissibility of input tax credit of tax paid or deemed to have been paid - Determination of the liability to pay tax on any goods or services or both - question raised are of the past period i.e. 2017-18 - Section 95(a) of the CGST RGST Act 2017 - Held that:- Section 95 says that only activities/matter which are either being undertaken or proposed to be undertaken are qualified for advance ruling - In the instant case as the period of activity is past-period i.e. 2017-18 hence, application is not eligible for advance ruling. 2019 (2) TMI 914 Request for withdrawal of Advance Ruling application - CENVAT Credit availed through TRAN-1 - reverse charge mechanism - validity of restriction imposed on admissibility of ITC by a Circular, which is contrary to the legal provisions - Held that:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed. 2019 (2) TMI 913 Request for withdrawal of Advance Ruling application - classification of services - GTA Services or not? - Applicability of N/N. 20/2017 - Integrated Tax (Rate) dated 22nd August 2017 - Held that:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed without going into the merits or detailed facts of this advance ruling application by this authority. Income Tax 2019 (2) TMI 912 Revision petition - recovery proceeding initiated - Held that:- We do not accept the stand of the Respondents that revision petitions do not survive. These revision petitions were filed way back in 2007. Counsel for the Petitioner had stated before us that the Petitioner had not asked for any adjournment in such revision petitions. Hearing of these revision petitions is thus not delayed due to the assessee. Several years later, we would not permit the department to recover the taxes arising out of the orders which are subject matter of such revision petitions. Stay petition - recovery proceeding - requirement of depositing 20% of tax pending appeals - Held that:- This court cannot reduce the requirement of depositing 20% of tax pending appeals. Firstly, these instructions themselves recognise exceptions and areas where the demand can be reduced by the revenue authorities; secondly, the instructions of CBDT to the revenue authorities aim to bringing about uniformity in an administrative action and cannot govern the discretionary powers of the High Court in the writ jurisdiction. We, therefore, cursorily looked at the nature of additions, nature of materials collected by the Assessing Officer and the ground of challenge by the assessee. It would prima facie appear that the assessee Petitioner would have arguable points against many of the additions made by the Assessing Officer. The nature of additions concern the finding of bogus purchases and inflated premium and share application money besides others. The Petitioner would deposit 5% of the principal tax demand arising out the assessment orders for the Assessment Years 2009-10, 2010-11 and 2011-12. This may be done within a period of four weeks from today. Till four weeks from today, there shall be no further coercive recovery against the Petitioner. If the Petitioner deposits the amount as directed, such stay shall continue till final disposal of the appeals by the Commissioner. 2019 (2) TMI 911 Review petition - error apparent on the face of record warranting review - Held that:- As in Haridas Das Vs. Usha Rani Bank (Smt) and Ors [2006 (3) TMI 686 - SUPREME COURT] held that rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason. In the present case, there is no error apparent on the face of the record and the petitioner in fact under the guise of review is challenging the order passed by this Court, which is under review. A mistake or an error apparent on the face of the record means a mistake or an error which is primafacie visible and does not require any detail examination. In the present case the petitioner has not been able to point out any error apparent on the face of the record, on the contrary this Court has decided the case on merits. See INDERCHAND JAIN (D) TH. LRS. VERSUS MOTILAL (D) TH. LRS [2009 (7) TMI 1029 - SUPREME COURT] Scope of review has held that re-appreciation of evidence and rehearing of case without there being any error apparent on the face of the record is not permissible in light of provisions as contained U/s 114 and Order 47 Rule 1 of Code of Civil Procedure, 1908. 2019 (2) TMI 910 Reopening of assessment - Whether the rent accruing in a prior year, not received in that year, could be assessed in a subsequent year when it is received; as 'income from house property' or otherwise as 'income from other sources' as found by the AO? - Held that:- Admittedly the rent arrears received in 2000-01 also related to the various prior years. However, there was no attempt to reopen the assessments of the earlier years by the AO; at least, those in which the limitation period had not expired. Hence for the assessment year 2000-01 reopening of assessment under Section 147 does not arise. All the same, we make it clear that there could be no protective assessment for the earlier years as made by the AO. Hence, for the year 2000-2001, we uphold the order of the Tribunal insofar as setting aside the assessment made on the arrears of rent received in the relevant previous year, which was not the annual rent received or receivable for that previous year's letting of the property. We answer both the questions framed as (i) & (ii) in favour of the assessee and against the revenue. Proceedings initiated u/s 147 - assess the arrears of rent received as 'income from house property' in the previous years of the relevant assessment years, in which the property was let and the rent accrued - whether it was within the period of limitation as provided under Section 149? - Held that:- We cannot countenance the argument especially noticing the fact that the assessee had taken legal proceedings for enhancement of rent and was following the mercantile system of accounting. Admittedly on the expiry of lease period, after the assessee acquired the property, the assessee sought for enhancement. There was no claim for eviction of tenants who were continuing in the premises paying rent as per the earlier agreement. The tenants having not acceded to the request of an enhancement, the assessee had taken legal proceedings which culminated in an arbitration and the arbitration concluded with the enhancement sought by the assessee being allowed which resulted in the receipts of arrears in a far later year relatable to various prior years. It cannot be said that the assessee did not have a reasonable expectation of enhancement. The assessee following the mercantile system also should have returned the rent claimed by them before the arbitrator as accruing in the respective previous years of the assessment year when the matter was pending arbitration. The argument holds no merit and is rejected. The question raised as (iii) is answered in favour of the revenue and against the assessee. Claim of deduction of Municipal tax - cheque was issued to the local authority prior to the end of the previous year relevant to the assessment year; but, however, the Bank statements show realization only on the commencement of the next assessment year - Held that:- Hon'ble Supreme Court in CIT v. Ogale Glass Works Ltd. [1954 (4) TMI 3 - SUPREME COURT], held that when a cheque is not dishonoured but encashed, the payment relates back to the date of tendering of cheque. The date of payment would be the date of delivery of the cheque. We do not find any reason to cause interference to the order of the Tribunal. We, hence, answer question no: (iv) in favour of the assessee and against the Revenue. For the year 2002-2003, the Tribunal has looked at the dates and allowed the deduction. For the other two years, the AO would verify the dates and consider it in accordance with the cited judgment of the Hon'ble Supreme Court. Credit for the tax deducted at source, on the arrears of rent received - Held that:- We find that the Tribunal has only held that the assessee must be given credit of the tax deducted at source. In such circumstances, it is for the AO to verify and give credit to the amounts deducted at source and deposited, evidenced by valid certificates issued by the deductor. The AO would consider the issue and pass appropriate orders. The revenue has a further contention that if tax deducted at source is from an amount, for which no income tax has been charged; being arrears of rent, the same cannot be given credit to. We cannot countenance such an argument, since if the deduction has been erroneously made from the amounts which cannot be categorized as income, necessarily the assessee is entitled to refund of such amounts. The assessee only claims credit insofar as the amounts credited to be set off on the tax payable in that particular year and the balance refunded. Reassessment proceedings - Claim of vacancy allowance as provided in Section 24(1)(i)(ix) - Held that:- regular assessments in which the assessee had returned rental income obtained from the very same building at Kolkata. We agree with the learned Senior Counsel that if at all a claim had to be made, it had to be made in the regular assessment. It is also pertinent that the Revenue would be disabled insofar as conducting an enquiry after long years within the period in which the reassessment is made. The Hon'ble Supreme Court has also held that re-opening is for the benefit of Revenue to bring to tax the escaped income and the assessee cannot agitate matters concluded in the original assessment. A reassessment has to be confined to that found in the notice which is issued by the AO or any other aspect discovered in the course of the proceedings, which appear prejudicial to the revenue. We, hence, answer the question of law raised as (v) against the assessee and in favour of the Revenue. We set aside the order of the Tribunal which remanded the consideration of vacancy allowance. Set-off of carried forward depreciation as existing in the last year of its operation, in the subsequent years in which the assets of the business were not put to use - Whether the assets can be said to have been kept ready for use and hence a passive use gleaned from the circumstances, so as to permit depreciation in the assessment years in which the assets were not put to use? - Held that:- no restriction in carrying forward the depreciation from the last year of operation or from the year it was allowed; even when the business does not continue as such or it does not at all exist. It also is permitted when there is a finding of existence of passive use of plant and machinery. It is not obligatory that the assessee should be carrying on the very same business or any business for that matter in the following year. Hence, even if there is no income from the profits and gains of business or profession in a particular year where there is carry forward of depreciation from the earlier year, then necessarily it has to be allowed as a depreciation for that year and could also be set off as against any other income under the various heads of income under Section 14. We, hence, answer question number (vi) with respect to carried forward depreciation being permitted set-off in the subsequent years, even when there is no business carried on by the assessee, and as against any head of income under Section 14; in favour of the assessee and against the Revenue. Admissibility of depreciation - whether a passive use cannot be extended for time immemorial, nor for the 24 years in which the assessee's unit had remained closed - Held that:- Especially when one of the conditions as found from Section 32(1) is the requirement of user of the tangible or other assets, in the previous year in which the deduction or allowance is claimed. On the question of depreciation being allowed in the very same year in which the assessee had no business and as a consequence no income from profit and gain of business or profession, our answer favours the Revenue and is against the assessee. If the allowance as per Section 32(1) does not arise then there is no question of carry forward under sub-section (2) of Section 32. The question numbered as (vii) in both its hues; of a depreciation allowance not being permissible in the long years when the assets were not put to use for the business of the assessee and the carry forward in those years when the allowance itself was not permitted are answered against the assessee and in favour of the revenue. Business expenses claimed by the assessee for that year in which there was no use of assets by the assessee can be permitted - Held that:- We have to observe that we are looking at the re-assessment proceedings and not necessarily the factual adjudication of whether the expenses claimed are excessive or not. The principle on which the re-assessment has been made is that if there is no business income, there could be no expenditure claimed under Section 37. We are only called upon to decide the said question of law, which also arises on reassessment and we do not think that our answering the question of law against the Revenue and in favour of the assessee would commend a remand to re-examine the issue on facts. The facts have already been gone into by the Assessing officer and the allowance granted and we do not attempt re-examination by another incumbent officer which would result in a further challenge on the ground of mere change of opinion. We hence reject the said ground raised by the Revenue. Un-absorbed business loss - Held that:- It is an accepted position that carry forward can be set off only against business income. The assessee had no business income for the said year. Hence, the said question has to be answered against the assessee and in favour of the Revenue. Unabsorbed depreciation - whether can be permitted to be set off against the income other than the 'income from profits and gains of business or profession' - Held that:- There was no use to which the plant and machinery were put to and, hence, there could be no deduction of depreciation claimed for the previous year. When such claim could not have been made under Section 32(1), then there is no question of any carry forward of such depreciation for reason of the claim for depreciation having never arisen in that previous year relevant to the previous assessment year. The claim for carry forward depreciation and set off of income, other than income arising from profits and gains of business has to be rejected. The question numbered as (ix) & (x) are also answered in favour of the Revenue and against the assessee. We make it clear that if there is any depreciation allowance, carried forward from the last year in which it was allowed as 'passive use', the same can be set-off in any of the subsequent years in which there was income from any other heads. Sustainability of annual value determination made by the AO merely on the basis of the rent paid by the earlier tenant in the premises - Held that:- The annual value as available under Section 23 can definitely be assessed on the normal expectation of the rent receivable or received in the relevant previous year. However, here the specific expectation was on the basis of the rent received in the earlier year from a previous tenant. Before the Tribunal the assessee produced an affidavit of the present tenant, the Federal Bank Limited, specifically indicating the amounts paid by them as rent for the tenanted premises. It was also specifically averred that the Federal Bank Limited, the present tenant, is not occupying that much area as the previous tenant. The issue is on facts and we discern no question of law arising from the order of the Tribunal with respect to the deletion of annual value as estimated by the AO. We, hence, refuse to answer the question and uphold the order of the Tribunal. 2019 (2) TMI 909 Reopening of assessment - consequential demand notice as well as the directions issued under Section 144A - Held that:- It is not in dispute that the petitioner has moved before the respondent No.2 under Section 144A of the Act seeking directions to respondent No.1 during the pendency of the reassessment proceedings under Section 143(3) read with Section 147 of the Act. It is hardly required to be stated that the respondent No.1 is bound by the directions issued by the respondent No.2 in terms of the order passed under Section 144A of the Act. That being the fact situation, the order impugned is passed by respondent No.1. It is the grievance of the petitioner that no decision has been taken by the respondent No.1 on the objections relating to the jurisdiction prior to passing of the order impugned. This argument of the learned counsel for the petitioner cannot be countenanced for having invited an order under Section 144A of the Act by respondent No.2. This Court is of the considered view that the judgments relied upon by the petitioner are distinguishable for the reason that no order under Section 144A of the Act was considered in the said cases. Writ petition stands disposed of with liberty to file an appeal before an appropriate authority in accordance with law. 2019 (2) TMI 908 Nature of expenses - addition on account of 'net present Value' (NPA) - whether said payment was capital in nature and hence cannot be allowed u/s 37(1) - Held that:- Tribunal noted that the assessee was engaged in trading of iron ore and mining ore. During the year under consideration, the assessee had expended a sum of ₹ 1.68 crores by way of payment to the various departments and obtained temporary working permission for mining purpose, which was a precondition. The Tribunal held that the payment was an essential payment required to be made for continuing its existing mining operation and nonpayment of the same would have resulted in adverse consequences. Under such circumstances, we see no error in the view of the Tribunal. Thus, not entertained. Allowable revenue expenditure - expenditure incurred for starting a new project which was later on abandoned - Held that:- Question no.(ii) was considered by this Court in the case of CIT Vs. M/s. Essar Oil Ltd. [2008 (10) TMI 649 - BOMBAY HIGH COURT], this Court had dismissed the Revenue's appeal. Under such circumstances, we see no error in the Tribunal having followed the decision in Essar Oil Ltd. (supra) to dismiss the Revenue's appeal before it. Thus, not entertained. 2019 (2) TMI 907 Assessment u/s 153C - AY covered in the six year period envisioned under Section 153A(1) - Search and seizure operation was conducted on 05.01.2009 - Held that:- It is quite evident that like in RRJ Securities [2015 (11) TMI 19 - DELHI HIGH COURT] the AO of the searched person recorded satisfaction, at a time when the assessee had filed its return for the concerned year. In the circumstances, the AO upon receipt of the papers ought to have taken steps under Section 153(1) and completed the assessment in the manner known to law, in accord with the decision in RRJ Securities (supra). The AO’s failure, therefore, was correctly interfered with. The impugned order of the ITAT was, therefore, justifiable and apposite in the facts of this case. No substantial question of law, therefore, arises. 2019 (2) TMI 906 Deduction u/s 80IB (10) denied - assessee had entrusted the development to another company by execution of a Joint Development Agreement - claim of an assessee incorporated for the purpose of real estate development for deduction - learned Senior Standing Counsel submitted that the builder, M/s.ETA has also claimed deduction and it would amount to double deduction - Held that:- As seen from the P L the appellant has not taken the cost of the land into consideration thereby claiming more surplus income for the purpose of 80IB(10) benefit. The appellant has shown only increase in work-in-progress of ₹ 2.22 crores along with some minimal expenses in its P L but this has nothing to do with the cost of the land alone. Tribunal merely stated that no expenses were recorded in the P L account. Therefore, the contention advanced by the Revenue in this regard is not tenable. That apart, a plain reading of Section 80IB(10) of the Act evidently makes it clear that deduction is available in a case where an undertaking develops and builds a housing project. The Section clearly draws the distinction between 'developing' and 'building'. In the preceding paragraphs, we have noted the factual position as could be culled out from the joint venture agreement, which clearly shows that the assessee is the developer and M/s.ETA is the builder and mutual rights and obligations are inextricably linked with each other and undoubtedly, the project is a housing project thereby, the assessee would be entitled to claim deduction under Section 80IB (10) of the Act. Thus, for the above reasons, we hold that the Tribunal erred in reversing the order passed by the CIT(A). We find that the authorised representative, who appeared on behalf of the assessee has specifically stated that there is no case of double deduction and it is only proportionate to their respective shares. We find that the Tribunal has not given any finding as to any double deduction and therefore, such a plea cannot be canvassed before us in this appeal. - Appeal filed by the assessee is allowed 2019 (2) TMI 905 Charitable activity - benefit u/s 11 and 12 - whether activities of the society fell in the category ‘advancement of an object of general public utility’ - whether the income from art gallery and sale of paintings, considered to be business income - Held that:- The assessee society has carried out activities in the form of annual art exhibitions, camps for senior and junior artists, providing maintenance to aged artists etc. It is also not the department’s case that any part of surplus was diverted from the society and applied for any personal benefit of any member or office bearer of the society. Therefore, it can be safely concluded that the dominant activity of the assessee society is not business, trade or commerce and, accordingly, any incidental or ancillary activity like hiring out of art gallery or selling paintings would not also fall within the categories of trade, commerce or business. Proviso to Section 2(15) of the Act, which was inserted by Finance Act, 2008, was directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb of an activity in the object of a general public utility but was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions. After duly considering the objects of the assessee society, the settled legal position with respect to interpretation of proviso of Section 2(15) of the Act and respectfully following the ratio of the judgment of the Hon’ble Delhi High Court in the case of India Trade Promotion Organisation vs. DGIT (Exemption) [2015 (1) TMI 928 - DELHI HIGH COURT] we are unable to concur with the observations and findings of both the lower authorities and while setting aside the orders of the Ld. CIT (Appeals), we direct the AO to allow the assessee the benefit of exemption u/s 11 & 12 of the Act for assessment year 2009-10. - Decided in favour of assessee. 2019 (2) TMI 904 Levy of penalty u/s 271(1)(c) - tax sought to be evaded by the assessee on the ground of furnishing of inaccurate particulars of income - non specification of charge - defective notice - Held that:- Notice issued by the AO under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee. 2019 (2) TMI 903 Rectification u/s 154 - rectify the opening WDV of product registration expenditure - Expenditure incurred on issuance of bonus shares - allowable revenue expenditure - Held that:- The undisputed position that emerges is the fact that the assessee has moved rectification petition u/s 154 for the first time towards his claim u/s 35D relying upon the decision of Hon ble Apex Court as well as the decision of jurisdictional High Court. The disallowance of original claim to the extent of 1/5th of total expenditure as made in the return of income had already attained finality since the assessee did not preferred any appeal before first appellate authority. The only basis on which the same has been denied by first appellate authority is the fact that there was no mistake apparent from record in any of the orders that require rectification. As held in ACIT Vs. Saurashtra Kutch Stock Exchange Ltd.[2008 (9) TMI 11 - SUPREME COURT] non-consideration of a decision of Jurisdictional Court or of the Supreme Court could be termed as mistake apparent from the record . Respectfully, following the same, we hold that the afore-said claim made by the assessee in terms of decision of jurisdictional High Court as well as the decision of Hon ble Supreme Court could be subject matter of rectification application u/s 154 notwithstanding the fact that the same was not claimed by the assessee during original assessment proceedings as well as during appellate proceedings. So far as the merits of the case is concerned we find that in the cited decision of CIT Vs General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT], after considering various contrary decisions including the decision of Hon ble Gujarat High Court rendered in CIT Vs. Ajit Mills Ltd.[1993 (8) TMI 19 - GUJARAT HIGH COURT] held that issue of bonus shares by capitalization of reserves is merely a reallocation of company s funds and there is no inflow of fresh funds or increase in the capital employed. Therefore, it could not be said that the company acquired a benefit or advantage of enduring nature. The total funds available with the company will remain the same and the issue of bonus shares would not result in expansion of capital base of the company. Therefore, expenditure incurred on issuance of bonus shares would be revenue expenditure. Thus we hold that the expenditure on account of issuance of bonus shares would be revenue in nature and hence, fully allowable in the impugned AY. The assessee has placed on record, the computations / assessment orders of subsequent years to demonstrate that the deduction of this expenditure has not been claimed / allowed by the assessee in subsequent years and hence, there is no double deduction. The material on record supports the same. Accordingly, the assessee s appeal stands allowed. Claim of interest u/s 244A on self-assessment tax paid - whether allowability of interest u/s 244A in not appealable before CIT(A) as the same is not part of order u/s 154 - Held that:- Upon due consideration, we are of the opinion that the assessee was entitled for legitimate interest as per law and the directions given by first appellate authority were merely consequential in nature since Ld. AO was directed to verify the assessee s claim qua interest at the threshold of statutory provisions as contained in Section 244A and ascertain the correct amount of interest due to the assessee. No perversity could be found in the impugned direction. Accordingly, the revenue s appeal stands dismissed. 2019 (2) TMI 902 Penalty levied u/s 271(1)(c) - non specification of charge - Held that:- AO issued notice dated 29/12/2009 which is also mentioned in the penalty order, in which he has not specified the limb for which penalty was initiated. Even in the assessment order, the AO did not mention as to under which limb of section 271(1)(c) the penalty had been initiated against the assessee. Therefore the show cause notice for levy of the penalty itself is invalid and bad in law and as such, the resultant proceedings get vitiated. Since the notice issued for initiating the penalty proceeding itself is not in accordance with law, therefore no penalty could be levied against assessee. We accordingly set aside the order of the authorities below and cancel the penalty. - Decided in favour of assessee. 2019 (2) TMI 901 Cash and jewellery found at the time of search and seizure operation U/s 132 - cash found as unaccounted or unexplained or undisclosed - Held that:- We find that the cash found at the time of search and seizure operation U/s 132 of IT Act from the premises of the Assessee was less than the cash in hand as per books of account. We further find that the jewellery found from the Assessee’s premises was less than jewellery valued as per Wealth Tax Records of various persons. Impugned Order of the CIT(A) wherein he deleted the aforesaid additions of ₹ 9,75,000/- and ₹ 1,09,72,957/-, needs no interference. The cash found, amounting to ₹ 9,75,000/-, being less than cash balance as per books of account; is fully explained by cash balance as per books of account. The AO erred in making addition of the aforesaid amount without any reasoning and in the absence of any evidence to show that the cash found was unaccounted or unexplained or undisclosed. Similarly, the jewellery found from the premises of the Assessee is also fully explained by Wealth Tax Records of various persons. The AO erred in making the addition of the aforesaid amount without proper reasoning, and in the absence of any evidence to show that the jewellery found was unaccounted or unexplained or undisclosed. AO had no basis to make the additions, when the cash found was explained by cash balance as per books of account and when the jewellery found was fully explained by jewellery disclosed in Wealth Tax Records of various persons. There is no material to warrant any interference by us with the impugned Order of the Ld. CIT(A). The order of the Ld. CIT(A) is sound in law. - Decided in favour of assessee 2019 (2) TMI 900 Penalty u/s 271AA - assessee failed to maintain adequate documentation in respect of international transaction entered into during year under consideration - Held that:- Assessee failed to file Form 3 CEB within prescribed period, for which Ld.AO has separately imposed penalty under section 271BA. As observed that at time of assessment, AO was in possession of these documents, based upon which, assessment order has been passed by holding international transaction to be at arm’s length. As perused Section 271AA of the Act, wherein penalty is leviable for failure to keep and maintain information and documents etc., in respect of international transaction or specified domestic transaction. In facts of present case, it is observed that assessee has maintained documents/information required as per section 92D of the Act, regarding international transaction, more particularly described under Rule 10 D of Income tax Rules 1962, which has been filed before the Ld.AO in Form 3CEB, vide letter dated 13/03/2014. Admittedly, AO accepted and took on record prescribed documents, that are submitted by assessee which forms part of paper book filed before us, more particularly placed at page 2- 152. Further, having regard to these documents AO, accepted international transaction entered into by assessee with its AE to be at arm’s length price, and no adjustment whatsoever has been made. Ld.AO has not expressed any difficulty in examining correctness of price adopted by assessee in respect of international transaction with AE. Thus in our considered opinion there is no justification for imposition of penalty under section 271AA - Decided against revenue. 2019 (2) TMI 899 Unaccounted income - Income arising out of the unaccounted sales/ excess stock - Assessment u/s 153A - Held that:- It is the seized material which gives rise to quantification of unaccounted sales and consequently unaccounted income. The seized material in the instant case contains notings in respect to certain unaccounted sales, namely with respect to 59 parties. The assessment order does not bring on record any such seized material which shows sales out of the books corresponding to each and every sale. Since section 153A of the Act gets invoked only with respect to the incriminating material found during the course of the search, clearly extrapolation without any incriminating material would be contrary to the spirit of the section. There are a large number of judicial decision on the issue, including the ones quoted by the Ld. C.I.T(A) which support this view. The objections of the AR with respect to the ownership of the document, the present position of litigation and its consequences in our context, are being discussed later in the Cross Objections of the assessee. But clearly these will not be material for the grounds raised by the department. Hence in the facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A) on this issue, therefore, we uphold the order of the Ld. CIT(A) and confirm the relief granted by him. - Decided against revenue. Unaccounted income calculated on the basis of unaccounted sales allegedly recorded in the seized documents - Held that:- The papers in question do not belong to M/s Gupta Perfumers P. Ltd. The assertion of M/s Gupta Perfumers P. Ltd. has not been found to be acceptable by the Settlement Commission and Hon’ble Delhi High Court. The papers were found from the assessee’s business premises as well as its Director’s residence. Neither any other party other than M/s Gupta Perfumers P. Ltd. has owned up these papers nor any such reference has been found in the narrations. Therefore the undisclosed sales and consequently the undisclosed income attributable to the assessee appears to be a reasonable decision in the circumstances. Hence the addition is upheld. Status of the income arising out of seized documents - Held that:- What was offered to Settlement Commission and what has been taxed by Assessing Officer in the present Assessment Order before us pertain to the same transactions emanating from the seized documents from the assessee’s premises. Clearly as the matter stands the Assessing Officer has held that the papers belong to the assessee company and hence the undisclosed income arising out of that belongs to assessee’s company on the basis of order of Settlement Commission as upheld by Honable Delhi High Court. We have upheld this position. Nevertheless the fact of the matter is that the issue has not reached finality. The decision of the Hon’ble Supreme Court, as and when it comes, will finally decide the ownership of the documents and hence will take the assessment of the income, so upheld in this order to finality. The ground is therefore disposed of, with the directions to the Assessing Officer to review the status of the income arising out of seized documents, as upheld, once the decision of the Hon'ble Supreme Court is available and realize taxes with respect to the additions upheld, only when the finality of ownership of the documents is put to rest by the decision of the Hon’ble Supreme Court. Unaccounted stock - Held that:- We are inclined to go with the order of the Ld. CIT(A) primarily on the ground that once an inventory is found to be defective, its reliability for estimating the income becomes doubtful. The assessment order does not counter in anyway the assessee’s grievance/objections that there is misreporting /inflation of the quantity and price of various items particularly raw material. This could have been easily done on the basis of of books of accounts available with him. He could have made an attempt to support his valuations, which he did not. Similarly, neither before Ld. CIT(A) nor before us any claim, resubmission or working has been submitted following the assessee’s objections. That being the situation the view taken by the Ld. CIT(A) appears to be reasonable and therefore, the same is upheld and accordingly, the ground no. 3 is rejected. 2019 (2) TMI 898 Determination of turnover for tax audit u/s 44AB - Computation of turnover in respect of trading of shares/derivatives - Applicability of Section 44AD for deeming provisions of net profit and Audit liability under section 44AB - addition applying profit rate of 8% of deemed income under section 44AD - Held that:- it is not in dispute that though the assessee claimed loss in share trading, but assessee did not maintain books of account and did not get the same audited, therefore, provisions of Section 44AD will apply in the case of the assessee. The A.O. in the assessment order has referred to share trading guidance note on tax audit under Section 44AB of the Income Tax Act published by ICAI, but noted that these have not been recognised by the Department, therefore, same are not binding upon the Department. The A.O, however, taken note of the same and applied to some extent for the purpose of computing the turnover of the assessee. The A.O. cannot go in both ways Either A.O. should do his own calculation based upon evidence and material on record to calculate the turnover of assessee for the purpose of making the addition or he should follow guidance note on tax audit published by the ICAI. No other basis have been shown by the A.O. for computing total turnover of the assessee. The A.O. has also not given any finding based on material and evidence on record if assessee has suffered any loss in the share trading transactions. Therefore, to the extent of computing total turnover of assessee, the matter needs re-investigation at the level of the A.O. Thus set aside the orders of the authorities below and direct the A.O. to reduce ₹ 10 lacs from the total turnover as computed in the assessment order. A.O. shall re-calculate the turnover of assessee based on evidence and material on record. The A.O. shall give reasonable and sufficient opportunity of being heard to the assessee and shall give specific finding on the submissions made by assessee before him. - Decided partly in favour of assessee for statistical purposes. 2019 (2) TMI 897 Disallowance on account of remuneration paid to partners of the firm - assessee is a law firm (partnership) and derived income under the head “profit and gains of business & profession” and “income from other sources” - whether remuneration paid to all the partners will be the amount of remuneration allowable u/s 40(b)(v) of the Act to be shared amongst themselves in their profit-sharing ratio in that year? - contention of the Assessing Officer is that the CBDT in circular No. 739 dated 25/03/1996 has clarified the position of the salary/remuneration paid to partners as provided u/s 40(b)(v) - Held that:- The finding of the AO as well as Ld. CIT(A) on this issue is not correct. The partnership deed has specified that the amount of remuneration allowable u/s 40(b)(v) would be the amount of remuneration paid to the partners and same would be shared in their profit-sharing ratio in that year. The profit-sharing ratio of the partners has been specified as 2/3rd ( Sh Rajiv K Luthra) and 1/3rd ( Sh Mohit Saraf). The assessee accordingly paid total remuneration of ₹ 45,00,000/-in the profitsharing ratio to both the partners. In our view, the clause of the partnership deed satisfies the requirement of the CBDT circular (supra) and there is no violation on the part of the assessee in this regard. As decided in the case of Vaish Associates [2015 (8) TMI 855 - DELHI HIGH COURT] the partners were entitled to annual salary equivalent with percentage of profit multiplied by the allocable profit calculated as per the provisions of section 40(b)(v) of the Act. In the instant case also remuneration has been shared in the profit-sharing ratio. The issue in dispute also deserve to be allowed on the principle of consistency as identical disallowance has been deleted by the Ld. CIT(A) immediately preceding assessment year i.e. 2009-10 and no appeal has been preferred by the Department on the said issue before the Tribunal. - Decided in favour of assessee. 2019 (2) TMI 896 Penalty u/s 271(1)(c) - disallowance of interest expenditure restricted partly by passing an rectification order u/s 154 - AO rejected the contention of the assessee by observing that the total interest received on loans and advances is less than deduction of interest expenditure u/s. 57(iii) which was claimed which is against the principle of prudency and normal business practice that assessee will pay more interest than interest earned on loans Held that:- AO has invoked principles of prudency and normal business conduct of the tax-payer that no businessman can pay higher interest expenditure than the interest income but the entire aforesaid conclusion arrived at by the AO is based upon conjectures and surmises without bringing on record any cogent incriminating evidences and material on record. It is not the case of the revenue that assessee has not incurred or not paid this interest expenditure of ₹ 31,91,743/- to the persons from whom borrowing were made. Nothing on record by the AO these borrowings were made for reasons other than commercial expediency but merely on conjectures and surmises, the conclusions are drawn by the AO against the assessee. Merely averred by the AO that assessee has paid more interest on unsecured loans raised than what was earned on these loans advanced by the assessee. The findings of the AO may be sufficient to make disallowance in quantum on the theory of preponderance of probabilities but it is not sufficient to fasten and saddle the assessee with penalty provisions as are enshrined u/s. 271(1)(c) of the Act as it could not be said based on the factual matrix of the case that the assessee submitted inaccurate particulars of income while filing return of income with Revenue or any attempt was made by the assessee to conceals its income from Revenue to evade taxes. there is no cogent incriminating material/evidence on record to justify levy of penalty within provisions of Section 271(1)(c) - Decided in favour of assessee. 2019 (2) TMI 895 Addition u/s 68 - unproved loans shown by the assessee in the light of the lender's admission made u/s. 132(4) that the lending entity was only involved in providing accommodation entries - Held that:- As decided in assessee's own case AO had primarily made the additions by believing and relying upon the admission of Bhawarlal Jain by ignoring the fact that nowhere in the statement of Bhawarlal Jain or any of his associates recorded u/s 132(4) of the Act had admitted that any of their concerns had ever given accommodation entries by way of unsecured loans to the assessee. From the documentary records, we also noticed that actually, the assessee had already discharged the onus caste upon him to prove the identity, creditworthiness and genuineness of transactions. Even Ld. CIT(A) had discussed in detail that the documents submitted by the assessee and their co-relation with the onus, which stands discharged by the assessee. But on the contrary, the AO had not brought on record any evidence to controvert or rebut the claim of the assessee and even no findings were recorded by the AO to the effect that the evidences produced by the assessee were untrustworthy or lack credibility. On the repeated request made by the assessee to furnish copies of print outs of date of transactions pertaining to the assessee and relevant to A.Ys.2012-13 and 2013-14. Apart from that the AO was also asked to furnish any other evidence in his possession in regard to the unsecured loans procured by the assessee from various entities of Shri Bhanwarlal Jain Group. But the AO did not supply the same. Apart from that the AO had also failed to provide copy of "party-wise ledger account" of the assessee containing details of corresponding cash received against loans on various dates and commission charged by Bhanwarlal Jain thereon. Therefore in such circumstances, the AO had no valid basis for treating the ‘unsecured loans’ as ‘accommodation entries’. There is nothing on the record to show that the assessee admitted at any point of time to have procured accommodation entries of loans. - Decided in favour of assessee. 2019 (2) TMI 894 Reopening of assessment - CIT(A) dismissed the challenge to validity of reopening by laconically holding that the assessee was not opposed to reopening of the case in initial stage and opposed merely because certain additional/disallowance has been done by the A.O. - Disallowance u/s. 43B being unpaid bonus - whether the unpaid performance bonus to employees and directors of the company is neither statutory nor paid on accrual basis? - Held that:- CIT(A) has not adjudicated this issue on a mistaken finding that the assessee has not initially challenged the reopening. The fact of the case indicates that the assessee has challenged the reopening duly from the inception itself. Hence, it was incumbent upon the CIT(A) to decide the issue of validity of reopening duly raised before him. In our considered opinion, the CIT(A) has erred in not deciding the issue. The material upon which the assessment is reopened is not fresh material but the accounts of the assessee and the noting of the auditor as mentioned above. By no stretch of imagination, it can be said to be a fresh material having live link to the formation of the A.O.’s belief that there was any escapement of income. Furthermore, the very fact that it has been duly made clear that the outstanding bogus was in the nature of customary bonus not covered u/s. 43B(C), there was no question of the same being subject to section 36(1)(ii) de hors any contrary finding by the A.O. It is settled law that the reopening on the basis of the change of opinion is not permissible under the Act. For this proposition, we placed reliance upon the Hon’ble Apex Court decision in the case of CIT vs. Foramer France [2003 (1) TMI 101 - SUPREME COURT]. Accordingly, the reopening of this case is held to be invalid and the assessment framed there-under is thus quashed. As regards the merits of the case, it is duly noted that the assessee has submitted that the outstanding bonus was customary bonus and not filing u/s. 36(1)(ii) to come under the ambit of disallowance u/s. 43B(C). The assessee has quoted several case laws for the proposition that the customary bonus do not attract the rigors of provision of section 36(1)(ii) which are applicable to bonus payable under payment of Bonus Act. Accordingly, we find that without giving a finding to the contrary in this regard, the A.O. has referred that the case laws quoted by the assessee were with regard to section 36(1)(ii) and, hence, not applicable. This is clearly a lack of application of mind by the A.O. The said case laws duly provide that the customary bonus do not attract the provision of section 36(1)(ii) and, hence, as a consequence they did not attract the disallowance u/s. 43B(C). What the Revenue has submitted in the grounds of appeal is misconceived and not at all arising out of the order of the authorities below. The sole issue made out by the A.O. was that amount was to be disallowed u/s. 43B(C). There was no issue that the same has not accrued. By raising ground that the amount payable was not statutory, the Revenue is arguing against itself. When the amount payable is not statutory, it will not come under the ambit of Rule 36(1)(ii). Hence, there will not be any question of disallowance u/s. 43B(C) then. - Decided against revenue. 2019 (2) TMI 893 Addition on account of interest free loan given to sister concerns - assessee's justification to “business expediency” and to provide necessary details regarding business purpose behind investing money in sister concerns - Held that:- As decided in assessee's own case issue concluded by the decision passed by this Court in The Pr. Commissioner of Income Tax (Central), Ludhiana v. Shri Satish Bala Malhotra, Legal Heir of Shri Ashok Kumar Malhotra, Prop. M/s Modern Publishers, MBD House, Railway Road, Jalandhar [2017 (4) TMI 1330 - PUNJAB & HARYANA HIGH COURT] whereby the questions have been decided against the revenue. Depreciation in respect of copier unit and paper unit - AO disallowed the claim of depreciation of the assessee by observing that the assessee had made the claim for deduction of depreciation without filing the revised return - Held that:- In the present case, it is an admitted fact that the assessee inadvertently could not claim the depreciation in computation of income. However, that claim was made in the tax audit report attached with the income tax return which was available on the record. Therefore, the CIT(A) rightly directed the AO to allow the depreciation claimed by the assessee by following the judgment of CIT Vs Ramco International (2008 (12) TMI 413 - PUNJAB AND HARYANA HIGH COURT). No valid ground to interfere with the findings of the CIT(A). 2019 (2) TMI 835 Addition u/s 68 - AO had made the additions by treating the ‘unsecured loans’ received by the assessee from 34 parties as ‘unexplained loans received by the assessee’ - intimation was received by the revenue from the DDIT(Inv) Mumbai to the effect that assessee was one of the beneficiaries of accommodation entries for loan from various concerns/ entities which were benami concerns, managed and controlled by Bhawarlal Jain Group Held that:- The Investigating Wing of the department had examined all the loan creditors wherein all the creditors had appeared and confirmed the transactions of loans advanced to the assessee. The AO had primarily made the additions by believing and relying upon the admission of Bhawarlal Jain by ignoring the fact that nowhere in the statement of Bhawarlal Jain or any of his associates recorded u/s 132(4) of the Act had admitted that any of their concerns had ever given accommodation entries by way of unsecured loans to the assessee. From the documentary records, we also noticed that actually, the assessee had already discharged the onus caste upon him to prove the identity, creditworthiness and genuineness of transactions. CIT(A) had discussed in detail that the documents submitted by the assessee and their co-relation with the onus, which stands discharged by the assessee. But on the contrary, the AO had not brought on record any evidence to controvert or rebut the claim of the assessee and even no findings were recorded by the AO to the effect that the evidences produced by the assessee were untrustworthy or lack credibility. Although it was claimed by the AO that during the course of search at the residence of Shri Bhanwarlal Jam, a pen drive (Sony 4 GB) was seized and as stated in para-5.1 on page-8 of the impugned order. Also claimed that after decryption of the data stored in the said pen drive, a database containing details of loans advanced by all 70 benami concerns of Shri Bhanwarlal Jain and Shri Rajesh Bhanwarlal Jain from F.Y.2006-07 and onwards was prepared by the Investigation Wing, Mumbai. Whereas on the repeated request made by the assessee to furnish copies of print outs of date of transactions pertaining to the assessee and relevant to A.Ys.2012-13 and 2013-14. Apart from that the AO was also asked to furnish any other evidence in his possession in regard to the unsecured loans procured by the assessee from various entities of Shri Bhanwarlal Jain Group. But the AO did not supply the same. Apart from that the AO had also failed to provide copy of "party-wise ledger account" of the assessee containing details of corresponding cash received against loans on various dates and commission charged by Bhanwarlal Jain thereon. Therefore in such circumstances, the AO had no valid basis for treating the ‘unsecured loans’ as ‘accommodation entries’. There is nothing on the record to show that the assessee admitted at any point of time to have procured accommodation entries of loans. - Decided in favour of assessee. Customs 2019 (2) TMI 892 Suspension and cancellation of registration - Held that:- The learned Assistant Solicitor General has taken expeditious steps and ensured that a statement is placed on record appraising us of the steps taken to hear urgent matters by the Bangalore Bench. On instructions from the Principal Bench of CESTAT, we are informed that there would be a sitting of the Bangalore Bench between 18.02.2019 to 22.02.2019. The learned Senior Counsel appearing for the appellant also assures us that an appeal will be filed on Thursday, ie., day after tomorrow. Hence, if a proper appeal is filed, then we request the Bangalore Bench to take it up for admission and interim orders atleast on the 19th of February, 2019. Appeal closed. 2019 (2) TMI 891 Absolute Confiscation - Gold - prohibited item or not - Held that:- Two of the appellants in the present matter brought impugned gold from Bangkok to Gaya International Airport without declaring the same to Customs authorities. I cannot find from the whole proceedings as to how the Customs authorities posted at Gaya International Airport could not detect such huge quantity of gold being removed from Gaya International Airport by passengers on their arrival. I am not able to find any submission from the individual appellants explaining as to how they removed gold on arrival from Bangkok or how they procured gold before they were intercepted at Mugalsarai Railway Station. The individual appellants are not in a position to explain how they procured such quantity of gold. Further, they do not have any document to establish licit acquisition of the same. I, therefore, do not interfere with the order of confiscation of impugned gold and imposition of penalty. However, I find that this Tribunal in the above stated case of Shri Sanjeeb Kumar @ Pappu Kumar and others have held that margin of profit in trade of gold is very less. Appeal allowed in part. 2019 (2) TMI 890 Benefit of exemption from CVD on imported goods subject to no cenvat credit - Applicability of N/N. 30 of 2004 as amended by notification no 34 of 2015 and 37 of 2015 - Effect of judgement in the case of COMMISSIONER VERSUS SRF LTD. [2016 (7) TMI 1381 - SUPREME COURT], where Apex court has dismissed the review petition filed by the Department - Held that:- The amendment made by notification No. 34 of 2015 provides a condition qua payment of duty on inputs and non-availment of credit in manufacturing. Therefore, the sweep of the judgment of SRF Ltd. is not affected. The Notification No. 37 of 2015 further relaxes the condition that the nil payment of duty on input would also qualify as payment of duty. Tribunal dismissed several appeals of the Revenue on 27.11.2017 and 21.03.2018 against the respondent by following the previous orders of the Tribunal - No appeal has been preferred against the above two orders and limitation period has expired. The orders have attained finality. In view of dismissal of the review petition of the department by Apex Court in SRF LTD., appeals filed by the department are not sustainable - appeal dismissed - decided against Revenue. 2019 (2) TMI 889 Valautaion of imported goods - coating plant - inclusion of fee paid for technical assistance in the assessable value - Rule 9 of the erstwhile Customs Valuation Rules, 1988 read with Section 14 (1) of the Customs Act, 1962 - Held that:- In terms of Rule 9 (1)(c) of the Customs Valuation Rules, Royalty and license fee payable by the buyer to the seller directly or indirectly are required to be added to transaction value subject to two conditions, (i) these are related to the imported goods and (ii) these are payable as a condition for sale of goods being valued. After careful review of the Article 6 along with other clauses of the agreement, it can be concluded that by no stretch of imagination can it be concluded that the payment of US$2 million was a condition for the sale of the coating plant by the supplier to the Respondent. Since the one of the main conditions specified in Rule 9 (1) (c) of the Customs Valuation Rules, 1988 is not satisfied, there is no justification for addition of the said amount to the transaction value of the imported coating plant. In the case of Hindalco Industry Ltd. [2015 (5) TMI 696 - SUPREME COURT], the Hon’ble Supreme Court considered and decided a similar question with reference to the license fee paid for import of capital goods for setting up of a smelter plant. The Apex Court came to a similar conclusion that such license fee pertained to service that was provided post import of the goods for manufacturing and hence, not includible in the transaction value of the imported goods. Appeal dismissed - decided against Revenue. 2019 (2) TMI 888 Revocation of CHA License - forfeiture of security deposit - fraudulent import undertaken by (i) M/s M.A. Traders, Kolkata and (ii) M/s Z.S.Trade Com Pvt. Ltd. - contraband and mis-declared item - principles of natural justice - Held that:- There are discrepancies between the statements given by Mr.Abid Ali as well as Mr.Maswood Ahmed. The appellant has sought cross-examination of both the witnesses. Though one of the witnesses is said to have appeared on 12.03.2018, no personal hearing took place on that date. Since cross-examination of the two witnesses is claimed to be significant to the defence for the appellant, we are of the view that the matter needs to be remanded to the adjudicating authority to pass denovo orders after extending an opportunity for cross-examination of Mr. Abid Ali as well as Mr. Maswood Ahmed - Appeal allowed by way of remand. Insolvency & Bankruptcy 2019 (2) TMI 887 Corporate insolvency resolution process - unpaid operational debt - Held that:- There is no escape from the conclusion that the "corporate debtor" has committed default and the amount of ₹ 47,34,736 has remained unpaid. Thus, default has been committed by the corporate debtor within the meaning of section 3(12) read with section 4 and section 9(1) of the Code, 2016. In the present case no petition under section 34 of the Arbitration Act or appeal under section 37 of the Arbitration Act is pending and the arbitral award has attained finality. As a sequel to the above discussion, this petition is admitted. 2019 (2) TMI 886 Insolvency Resolution - RP raising interim finance - whether supplying electricity to the corporate debtor not falls within the definition of essential supplies classified in regulation 32 of IBBI [CIRP] regulations? - Expenses to be incurred on or by the resolution professional - Held that:- As u/s. 25 of the Insolvency Code,Duties of Resolution Professional are prescribed according to which Resolution Professional is required to undertake the action for raising interim finance so that the business activity of the Corporate Debtor can be restored. Any cost incurred by the Resolution Professional in running the business of the Corporate Debtor as a going concern is to be treated as “Insolvency Resolution Process Cost” (Refer Section 5(13)(c) prescribing definition of “Insolvency Resolution Process Cost”). The expenditure incurred to run the business of a Debtor Company is, therefore, to be borne by the Committee of Creditors. As far as the question of payment to be made to DGVCL is concerned, the Resolution Professional is hereby directed that electricity consumed on commencement of CIRP shall be paid as per the prescribed charges as cost of CIRP. The commencement of CIRP in this case is from the date of the Order i.e. 09.08.2018. For the old outstanding payment due as on the date of commencement of CIRP, DGVCL has an option to lodge its claim of electricity charges to the Resolution Professional as prescribed under Insolvency & Bankruptcy Code. A requisite form is required to be submitted to Resolution Professional for lodgement of claim which ought to be admitted for due consideration, either at the time of finalization of Resolution Plan or even at the time of Liquidation of Assets of the Debtor Company. The Application filed by the Electricity Company is therefore allowed in terms of the above directions. Miscellaneous Application as submitted by an employee of Oracle Home Textile Limited (Corporate Debtor) and contesting that this Application is on behalf of all the Employees and Workmen of the Corporate Debtor - Prayer of the Applicant is to give direction to Resolution Professional to consider the salary payment to all Employees and Workmen - Held that:- The Employees and the Workmen of the Debtor Company are hereby directed to fully cooperate with the Resolution Professional so that the manufacturing activity as well as other business activity of the Debtor Company should not get hampered in any manner by the conduct of the Workmen/ Employees. The members of the Committee of Creditors shall induct Funds as per their respective voting share ratio so that the business of the going concern must not get adversely affected. The Resolution Professional shall put up the details of the expenditure incurred which is to be ratified by the members of the Committee of Creditors and also to be paid accordingly. 2019 (2) TMI 885 Corporate Insolvency process - default in payment of the operational debt - Held that:- The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. As a consequence of the above facts and record, application is admitted in terms of Section 9(5) of IBC, 2016 moratorium as envisaged under the provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor prohibiting accordingly. FEMA 2019 (2) TMI 884 Contravention of provisions of Section 9(3) of the FERA Act - violation of FERA - petitioner having not been made aware of the show cause notice, the impugned order passed thereon is exparte and caused grave and serious prejudice to him - Held that:- Various foreign exchange resources of the country and the proper utilization thereof in the interests of the economic development of the country. This Act is now repealed by virtue of a new law namely, the Foreign Exchange Management Act, 1999, but even though repealed, the proceedings under FERA Act can continue. The provisions of the Act enable to carry out searches and confers powers to arrest as well. The violation of FERA is, thus a grave and serious issue. Its strict and stringent provisions enable the authorities to adjudicate into the breaches of the law, and thereafter, if proved, impose penalties. That is how the impugned order proceeds. The impugned order does not show that the petitioner was duly served, but deliberately did not appear or avoided to appear. Having received the show cause notice and related papers, he did not file any reply. He avoided even the service of the proceedings. The above is not the position emerging from the order itself. Rather the order is passed after observing that certain attempts to serve the petitioner were made but having not found him at the premises of one Hasmukh Shah, the order was passed in his absence. Once the factual position as stated in the Writ Petition is undisputed, then, this Writ Petition must succeed. We allow the Petition by quashing and setting aside the impugned order. PMLA 2019 (2) TMI 883 Offence under PMLA - Provisional Attachment - amount seized from the possession of the Appellant - Held that:- the respondent has sufficiently explained the reason to believe that why the said amount is required to be attached under Section 5(1) of PMLA, 2002. It is not denied by the appellant that the aforesaid amount has been seized from the possession of the Appellant, secondly, the said amount is reflected in the FIR No. 27/2016 and the charge sheet dated 17.06.2016, thirdly, there is no material placed by the appellant that the said criminal case is disposed of in his favour. There are sufficient reasons explained by the respondent as well as Adjudicating Authority in attaching the amount involved in this appeal and confirmation of the same respectively. We are in agreement with the submission of the respondent that the appellant failed to discharge his burden as required under Section 24 of the PMLA. The technical objection raised by the appellant is that he has been acquitted in the criminal case in PS case no. 12 dated 30.01.2014 in which the aforesaid amount has been seized. Secondly, it is also submitted by the appellant that the seizure of aforesaid amount in PS case no. 27 dated 03.02.2016 is illegal. In this regard, the Appellant ought to have moved the concerned Trial Court to get the aforesaid amount released in his favour. Appeal dismissed. 2019 (2) TMI 882 Money laundering - infusion of cash from M/s. Jagat Projects Ltd. into bank accounts of entities controlled by Jain Brothers as reflected in the bank accounts of these entities - ITO recorded a finding that M/s. Jagat Projects Ltd had laundered its unaccounted income through a set of companies controlled by Jain Brothers in the guise of share subscription money at a huge premium to the tune of ₹ 64.70 Crores - respondent filed the application under section 17 (4) of PMLA,2002 for retention of the property during the pendency of the proceeding relating to any offence under this Act Held that:- The PML Act is the Special Act. The provisions of said Act are very stringent which have to be applied strictly. No different meaning or interception can be given in the absence of ambiguity of any provisions. It is settled law that a particular thing should be done in a particular manner, it must be done in that way and none other. To retain such property for the purpose of proceeding under section 8 of the Act, the learned counsel appeared on behalf of the appellant has argued that the impugned order is totally contrary to the law passed by the adjudicating authority as due process has not been followed by the ED, which is mandated under section 20 of the Act. After the retention of the property, the respondent has not passed an order for retention or confirmation of freezing of the property for purposes of adjudication under section 8 of the Act. Rule 3 of ‘The Prevention of Money-laundering (The manner of forwarding a copy of the order of retention of seized property along with the material to the Adjudicating Authority and the period of its retention) Rules, 2005 mandates for the same It appears from the impugned order, there is no discussion at all with regard to retention the property, except it is stated that after considering the original application, submission of the defendant, it is held that the condition laid down for retention are satisfied and original application is allowed. The case on merit of the parties has not been discussed or considered by the adjudicating authority. This said fact is admitted by the learned counsel for the respondent before us. Under these circumstances, the impugned order is an order in the eyes of law which is not sustainable Service Tax 2019 (2) TMI 881 Tout operator service - tourist vehicle or not - compliance with Rule 128 of the Central Motor Vehicles Act or Rules, 1988 - Held that:- No evidence has been produced by the vehicle being used for the purpose of transportation of employees were issued permit as tourist vehicle under Rule 128 of Motor vehicle Rules, 1998. In absence of such permit the vehicle cannot be treated as tourist vehicle as held by Tribunal and upheld by Hon’ble Apex Court in the case of Bharat Travels [2010 (7) TMI 471 - CESTAT, AHMEDABAD] - appeal dismissed - decided against Revenue. 2019 (2) TMI 880 Works Contract services - provision of Thermal Insulation, Sound Insulation, Water Proofing, by using their labour and materials - period 16/06/2005 to 31/12/2006 - N/N. 01/06-ST dated 01/03/2006 - Held that:- It is apparent that just because goods are consumed in provision of Service, a contract does not become a Works Contract. There has to be a clear intention of sale which needs to be established before a contract can be terms as works contract. It is seen that the lower authorities have not examined the contract which has been included by the appellant in this appeal memorandum. Since the matter has not been examined by both the authorities in the proper perspective, the impugned order is set aside - matter is remanded to the Original Adjudicating Authority for fresh decision - appeal allowed by way of remand. 2019 (2) TMI 879 Refund of accumulated CENVAT credit - export of service as per Rule 6A of Service Tax Rules, 1994 - non-submission of declaration as required under N/N. 39/2012-ST dated 20.06.2012 - Held that:- As found from the show-cause notice, appellant had made presented its claim in conformity to such procedure along with submission of documents, but it had not made a pre-declaration before the jurisdictional authority prior to the date of export, which appellant claims virtually to be imposable considering the nature of services provided by it i.e. data analysis, category of which is referred in the preceding paragraph. Para 3.4 of the said notification under sub-para (b) indicates that the jurisdictional authority, having regard to the declaration, if satisfied that the claim is in order, shall sanction the rebate either in whole or in part but it is quite confusing if the same notification indicates the filing of declaration before export or declaration under 3.4(a)(c) that such taxable services has been exported in terms of rule 3 of the said rules, along with documents evidencing such export! - Further there is no stipulation in the notification that if the declaration prior to export is not made, then the same cannot be made in a future date or that departmental authority cannot call for the same in a subsequent day. Primary reason for grant of such rebate to the exporter is to encourage them for generation of foreign exchange for the country, where procedural requirement which is the handmade justice delivery, should not act as a stumbling block when such an irregularity of procedure is remediable. Rebate denied also on the ground of time limitation - Held that:- Reliance placed in the case of Oceans Connect India Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-III, [2016 (9) TMI 377 - CESTAT MUMBAI] in which Rule 5 and Section 11B were being analysed, refund filed on or after the last date of quarter, since to be filed on quarterly basis, is to be taken within the period of one year, since under Section 11B it cannot start on any date before the end of the quarter, the same has to be reckoned from next date when quarter ends - without going into the intricacy of the issue as to if period of limitation can be invoked, if not cited in the show-cause as a ground for rejection of refund, there is no hesitation to hold a finding that appellant s refund claim was filed within the stipulated time. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 878 Imposition of penalty - non-payment of service tax - tax with interest paid on being pointed out - Held that:- The Appellant although has not charged service tax from his clients but despite that paid the entire service tax amount prior to the receipt of the Show Cause Notice and also paid the entire interest before the issuance of the order-in-original, this is a fit case to invoke the provision of Section 80 ibid. This is a case where the Appellant has been able to show reasonable cause for delayed payment under bonafide belief as to taxability to service - the penalties imposed on the Appellant cannot be sustained - appeal allowed - decided in favor of appellant. 2019 (2) TMI 877 Time Limitation - suppression of facts or not - Held that:- The Audit of the record of the appellants was conducted in the month of December 2012 wherein the issue of ineligible credit availed by the appellant was raised on the basis of the same Audit Report; without further verification a SCN is issued on 03.11.2015 that is nearly three years after the Audit and there is no material on record to show that the appellants have suppressed the material facts with intent to evade payment of duty. It is pertinent to note that in the earlier Audit conducted in the year 2010 the report of which is on record, the Department did not raise this objection with regard to service provided by the service provider and subsequently also there is no demand whereas the appellant is continuously availing the service from the service provider and paying the Service Tax on reverse charge basis and availing the CENVAT credit - when the Department was aware of all the facts relating to the payment of Service Tax to the service provider then alleging suppression of facts is not justified. The impugned order is not sustainable in law as the entire demand confirmed by the Revenue is barred by limitation - appeal allowed - decided in favor of appellant. 2019 (2) TMI 876 Valuation - Outdoor catering services - inclusion of cost of the newspapers as also the value of the packed items sold by the appellant on the printed MRP in assessable value - benefit of abatement under N/N. 1/2006-ST. - time limitation. Held that:- There is no dispute about the factual position. The adjudicating authority has not rebutted the above factual and contractual contents of the agreement entered into between the appellant and the Railways. The appellants are not making any money from the supply of the said newspapers to the passengers from whom the Railways have already retrieved the cost at the time of supply of the ticket - further, in any case and in any view of the matter the supply of newspapers is not covered by the definition of outdoor caterers is given in Section 65(76a) of the Finance Act. Newspapers supplied by the appellant on behalf of the railways can by no stretch of imagination, be considered to be in the same line of food or food articles - the cost of the newspapers cannot form part of value of catering services . Inclusion of sale of packed confectionary items to the passengers - Held that:- The issue is no more res integra and an identical issue was considered by the Tribunal in the case of LSG Shyshape Chegs (P) Ltd. v. CST [2009 (1) TMI 120 - CESTAT BANGALORE] as also in the case of Imagic Creative Pvt.Ltd. v. Commissioner of Commercial Taxes [2008 (1) TMI 2 - SUPREME COURT OF INDIA], wherein it was held that when assessee was paying Sales Tax on portion of value of the contract than simultaneously Service Tax could not be demanded from it as they are mutually exclusive - The Commissioner has not denied the fact that the readymade packed items sold by the appellant has already discharged the VAT element. If that be so, the confirmation of Service Tax against the same by including the cost of the same in the value of the catering services is unsustainable. Benefit of Notification No.1/2006-ST dated 01.03.2006 - Held that:- As it is already held that the providing of newspapaers as a pure agent of railways and the sale of the packed foods on payment of VAT would not attract the Service Tax, the fact of non-inclusion of the said values in the invoices/bills raised by the appellant cannot be adopted as a ground leading to violation of condition of Notification. The appellants have correctly availed the benefit of the Notification in question. Time limitation - Held that:- The demand is hopelessly barred by limitation. The Revenue has not adduced any evidence of any willful suppression or misstatement on the part of the assessee so as to justifiably invoke the longer period. Admittedly the issues are complicated interpretational issues and cannot reflect upon any mala fide on the part of theappellant. The demand is accordingly hit by the bar of limitation having been raised beyond the normal period. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 875 Refund of CENVAT Credit - duty paying documents - invoices which are issued in the name of the premises other then the registered premises of the Appellant - Held that:- In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitle to the benefit of refund, both the authorities below have committed an error in rejecting the claim for refund on the ground which is not existence in law. There is no doubt that it is a beneficial provision and it is settled legal principle that any beneficial provision should be interpreted liberally. There is no dispute that lapse is there on the part of the Appellant but it is merely procedural lapse and due to that substantive benefit of Cenvat Credit cannot be denied to the Appellant - Rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of Cenvat credit wrongly taken. The Appellant is entitle for input credit, therefore the said Rule 14 is not applicable on the facts of the case. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 874 CENVAT Credit - common input services used for both exempted and taxable services - non-maintenance of separate records - Rule 6(3)(ii) of the CCR - Held that:- The Commissioner(Appeals) has only confirmed the demand for the period 01/04/2011 to 31/03/2012 by invoking the extended period of limitation under Section 73(1) of the Act. Further, in the present case invoking the extended period of limitation is not justified as the appellants have been filing the returns regularly and the show-cause notice was issued only on the basis of the internal audit conducted by the Department wherein they had examined all the documents furnished by the assessee - No material has been brought on record to show that there was an intention to evade payment of service tax on the part of the appellant. Therefore, the entire demand is barred by limitation. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 873 Refund of service tax - SEZ unit - Event Management Services - Management or Business Consultant Service - Sitting Services - Stock Exchange Service - Insurance Service - Subscription Fee - Business Auxiliary Service - Membership and Photography service - the impugned services were not approved at any point of time prior to the filing of the refund claim - Held that:- Initially when the refunds were filed, these impugned services were not approved by UAC and when the objections were raised by the Revenue, thereafter, the appellants vide its various letters sought approval from the UAC and finally UAC approved various input services except Event Management and Photography services. Since all the input services except Event Management and Photography services have been approved by the UAC, though subsequently, therefore, the appellants are entitled to seek refund on these input services which have been approved. Refund allowed except for Event Management and Photography services - appeal allowed in part. 2019 (2) TMI 872 Taxability - Construction of Residential Complex Service - period from October 2009 to September 2010 - Held that:- Larger Bench in the case of M/s. Bhayana Builders Pvt. Ltd. Vs. Commissioner [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] to hold that free supplies are not to be included in the gross amount charged. It was also held in the said case that for this reason, the 67% abatement cannot be denied - appeal allowed - decided in favor of appellant. 2019 (2) TMI 871 Taxability - Construction of Residential Complex Service - period from December 2009 to September 2010 - Held that:- Larger Bench in the case of M/s. Bhayana Builders Pvt. Ltd. Vs. Commissioner [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] to hold that free supplies are not to be included in the gross amount charged. It was also held in the said case that for this reason, the 67% abatement cannot be denied - appeal allowed - decided in favor of appellant. 2019 (2) TMI 870 Refund of service tax - export of service outside India - Section 66B of the Finance Act, 1994 read with Rule 6A of the Service Tax Rules, 1994 - Held that:- This issue is no more ras integra and has been settled by the Larger Bench of this Tribunal in the case of Span Infotech Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] wherein it has been held that in case of refund pertaining to export of services under Rule 5 of CCR, 2004, one year period is to be counted from the end of the quarter in which the FIRC is received. The impugned order remanding the case back to the Original Authority is not sustainable - appeal allowed - decided in favor of appellant. 2019 (2) TMI 869 Classification of services - Renting of immovable property services or not - Advance Development Cost received from Developers towards development of common infrastructure facilities - extended period of limitation - Held that:- Development of Common Infrastructure facilities outside Asset Area cannot be construed as Renting of Immovable Property or a service in relation to the renting of immovable property. The treatment of reimbursement of cost, of common facilities, as Renting Service by the Adjudicating Authority is not legal because such common facilities were developed by taking advances as a pool of fund, for the infrastructure to be used by common beneficiaries and the account was to be settled as per Agreement by returning excess, if any, or charging deficit, etc. if any, if the cost of the works exceeded or was less than the amount collected as advance. For rent on immovable property service, the expression in relation to has to be read in conjunction with the expression rental . The term rental even in enlarged form of Lease, Rent, Licence, etc., cannot encompass anything done for development of the common facility/ property. There is difference between anything done in relation to renting of immovable property service and anything done in relation to immovable property per-se, which is in common domain. The latter cannot fall within the ambit of the former. From the definition of Renting of Immovable Property Services as contained in Section 65(105)(zzzz),, it is evident that in order to be covered under renting of immovable property services, the nature of the activity should be that of renting or letting or leasing or licensing or other similar arrangements of immovable property for use in the course or furtherance of business. In the present case, there is no Service Provider-Service Recipient relationship between the appellant and the Developers, as regards the Advance development cost, because common facilities developed belong to none (held in trust) and the benefit is derived by all the 13 developers, as well as the public. Hence the same is not liable to Service Tax - Advance development cost is not consideration for any services rendered, therefore, Section 67 has been improperly invoked to take gross value as consideration for alleged services provided, even when whole of the deposit is liable to be spent and nothing retained as per the IDSA agreement. It is settled law that service tax, if any, is not applicable on the Advance Development Cost received prior to 01.07.2010. In the instant case taxable event happened even prior to the date when licensing of vacant land was included in the renting of immovable services w.e.f 01.07.2010. Therefore, taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied. The Infrastructure development cost as per IDSA is not covered under renting of immovable property and is not chargeable to service tax - appeal allowed - decided in favor of appellant. 2019 (2) TMI 868 Levy of service tax - difference between the fund value and the surrender value in case of pre-mature surrender/discontinuance of ULIP - whether the exercise of the right of the insurer to receive money is merely a transaction in actionable claim, so as to be out of the purview of service tax? Held that:- The actionable claim as defined under Transfer of Property Act means a claim to any debt, secured by any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant. From the definition of actionable claim, the insurance policy or the surrender value thereof would become an actionable claim or otherwise was a matter of dispute in the Apex Court in the case of Union of India Vs. Sri Sarada Mills Ltd., [1972 (9) TMI 145 - SUPREME COURT] wherein, it has been explained that right to receive insurance money is an actionable claim. While, it is true that the expression of Service under Section 65B(44) only w.e.f. 01.07.2012, however, even for the period prior thereto the transaction in question is a actionable claim and not a service. It has to be also noted that for the period prior to 01.07.2012, for an activity to be tax it had to qualify as a taxable service in one of the specified services - Since we are of the view, the transaction in question is not a service at all but the transaction in a actionable claim hence could not have been by any stretch of imagination covered under any of the specified taxable heads of service even for the period prior to 01.07.2012 - the demand of service tax on the surrender charges for the period in question is unsustainable. Demand of Interest on amount short paid - Held that:- The appellant assessee, having not debited the CENVAT register for the period June, 2012, needs to pay the interest on the said amount till the liability of ₹ 91,92,096/- has been paid i.e. to say for the period from July, 2012 to April, 2013 till the date on which debit entry was made in CENVAT register, interest liability on the ₹ 91,92,096/-, needs to be worked out as per the provisions of Section 75 of the Finance Act, 1994 and paid by the appellant assessee - penalty need not be imposed - decided against assessee. Service tax demand of ₹ 8,17,779/- - Held that:- The demand for the period needs to be upheld as appellant assessee is not able to show from the records that they had indicated the amount as other income in the service tax returns - demand with interest upheld - penalty set aside. Applicability of Rule 6 of the CENVAT Credit Rules - Held that:- Revenue has not challenged the findings of the Adjudicating Authority on merits qua the applicability of Rule 6, on this count itself, the appeal filed by the Revenue deserves to be dismissed. The mere fact that service tax was payable on the part of the value of the services subject to tax, that part of the value on which tax being levied cannot be said to be an exempt service. Only to draw an analogy, abatement was granted from the levy of service tax in excess of 33% on construction services in terms of Notification No. 01/2006-ST, the grant of said abatement did not result in the construction service being an exempt service - the amounts attributable towards surrender charges are not towards rendition of any service hence service tax liability does not arise. Appeal allowed in part. 2019 (2) TMI 867 Banking or Other Financial Services - levy of service tax on Vostro and SWIFT transactions - Held that:- The Tribunal in own case INDIAN OVERSEAS BANK VERSUS CCE & ST, CHENNAI [2018 (7) TMI 513 - CESTAT CHENNAI] had held that Vostro transactions amount to export of service and therefore, had set aside the demand in respect of Vostro transactions - the demand on Vostro transactions cannot sustain and requires to be set aside. SWIFT transactions - Held that:- The Tribunal held that the said transaction falls under Sub-Clause (vii) of Banking or Other Financial Services under Section 65(12) of the Finance Act, 1994 and held that it is a taxable activity - the demand raised in respect of SWIFT transactions requires to interference. Penalty - Held that:- Taking note of the fact that the issue is interpretational, we are of the considered opinion that the appellant has given reasonable cause for not paying service tax on SWIFT transactions - penalty set aside. Appeal allowed in part. 2019 (2) TMI 866 Extended period of Limitation - Levy of penalty - short payment of service tax - tax with interest paid on being pointed out - invocation of Section 73(1) of FA - Held that:- There appears to be no dispute that Appellants have not paid the duty demanded at the relevant time and hence short paid the duty to that extent. In case of non/ short payment of duty, Section 73(1) of the Finance Act, 1994 automatically comes into picture and demand is made in terms of that section, to recover the duty so short paid. In case the duty is paid after the relevant date the same gets adjusted by application of the section. The argument of the Appellants to the effect that they had paid the service tax prior to issuance of Show Cause Notice do not hold good in view of the decision of Bombay High Court in case of Shri Ram Aluminium Pvt Ltd [2009 (6) TMI 89 - BOMBAY HIGH COURT], where it was held that The question, therefore, of having paid the amount before issuance of the show cause notice or after issuing the show cause notice cannot result in holding that there is no requirement of determination. Appeal dismissed - decided against appellant. 2019 (2) TMI 865 EOU - CENVAT credit - input services - Outdoor catering services - Air Travel Agent Services - Rent-a-cab Services - Insurance services - Business Auxiliary Services - Business Support Services - Banking and Financial Services - Manpower Recruitment Agency Services - Maintenance and Repair Services - period involved is prior to 01.04.2011. Outdoor Catering Services - Air Travel Agent Services - Rent-a-Cab Services - Insurance Services - Held that:- These services are held to be eligible for Credit in the assessee’s own case in RR DONNELLEY INDIA OUTSOURCE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX [2017 (3) TMI 16 - CESTAT BANGALORE] - credit allowed. Time limitation - Held that:- The allegation raised in the Show Cause Notice is that Credit is not admissible for the reason that the invoice is addressed to the erstwhile name of the company. An another unit had merged with the present assessee and therefore, there was some difference in the name and address of the assessee. The said reason cannot be a ground for rejection of Credit when there is no dispute with regard to the payment of service tax or availment of services. Credit denied on the ground that the invoice does not show the Registration number of the service provider - Held that:- In the case of M/s. Imagination Technologies India Pvt. Ltd. [2011 (4) TMI 406 - CESTAT, MUMBAI], the said issue has been held in favour of the assessee - credit allowed. Demand of service tax on reimbursable expenses - Held that:- The said issue has been held in favour of the assessee in the case of M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] and therefore, the demand cannot sustain. Demand of differential Interest - demand on the ground that there is a delay in realization of the cheque - Held that:- The Tribunal in the case of M/s. Travel Inn India Pvt. Ltd. [2015 (6) TMI 626 - CESTAT NEW DELHI] has categorically held that when the cheque has been realized, the date of presentation of the cheque in the treasury should be considered as the date of discharge of service tax as per Rule 6(2A) of the Service Tax Rules, 1994 - demand of interest cannot sustain. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 864 Rectification of mistake - Composite Contracts/Works Contracts - error apparent on the face of record - Held that:- As far as the rectification prayed with respect to the name of the respondent, it is observed that respondent is directed to be recorded as M/s. L.R. Sharma and Co. by Hon’ble Delhi High Court [2018 (5) TMI 1062 - CESTAT NEW DELHI]. It is further perused that in the prayer to the impugned appeal, the appellant Department has also mentioned the assessee as M/s. L.R. Sharma & Co. Resultantly, the name of the respondent – assessee in the impugned order as L.R. Sharma is a typographical error apparent on record and can definitely be taken care of in view of Rule 41 of CESTAT Rules. The request to this aspect is hereby accepted. Necessary change be made in the title of the impugned order. Rectification of error in respect of determination of nature of works contract - Held that:- The Hon’ble Apex Court in Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT] case also has discussed about the importance of bifurcation of the work. Resultantly, there is no error apparent on record of the impugned final order as is alleged, the order has no where touched the merits of the case. The adjudication is kept pending till the relevant documents to appreciate the applicability of the case law settled by Hon’ble Apex Court to the given facts and circumstances is obtained on record and are considered first by the adjudicating authority below. It is too immature to take a call about the allegation as that of committing judicial indiscipline as is alleged by the applicant-respondent. Above all, the debatable issue cannot be considered under the garb of the rectification. Seen from any angle, this grievance of appellant is not sustainable. The application in hand is partly allowed permitting the necessary correction in the title of the appeal in the impugned Final Order. 2019 (2) TMI 863 Refund of service tax wrongly paid - GTA for transportation of tendu leaves - denial on the ground of principles of unjust enrichment and also on the ground that no proof has been tendered by the appellant to show that the impugned services were with respect to agricultural produce. Unjust enrichment - Held that:- The appellant was discharging the tax liability under reverse charge mechanism for all the said services. In view of this admitted fact, when it was the obligation of the service provider to discharge the service tax, but in the present case, the liability has been discharged by the recipient, the question of recovering the same from the service provider does not at all arise - It is obvious in the given circumstances that the incidence has been born by the appellant who otherwise is the service recipient - refund cannot be rejected on this ground. Denial on the ground that no proof has been tendered by the appellant to show that the impugned services were with respect to agricultural produce - Once there was no evidence on record to prove that the refund of service tax was with respect to such services as were incurred in relation to agricultural produce only, the adjudicating authority had no option but to reject the claim - refund rightly rejected on this ground. Appeal dismissed - decided against appellant. 2019 (2) TMI 862 Renting of immovable property - inherited property - joint owners - association of persons or not - demand of service tax on co-owners when the property is jointly owned by them - SSI Exemption - Held that:- When family members come together to rent property belonging to the family or inherited by operation of law, it cannot be considered as an association of persons . The levy of service tax on Renting of Immovable Property is on the income received from the service provided. The co-owner can lease only that part of the property belonging to him. The Tribunal in the case of Sarojben Khusalchand Vs. C.S.T. [2017 (5) TMI 240 - CESTAT AHMEDABAD] had occasion to analyse the very same issue as to whether co-owners can be considered as an association of persons and it was held that it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. SSI Exemption - Held that:- For verification as to whether these appeals fall within the threshold limit, it is necessary to remand the matter back to the adjudicating authority for the limited purpose of verifying the threshold limit of the individual co-owners, as may be applicable during the relevant periods of dispute. Appeal partly allowed and partly remanded. 2019 (2) TMI 855 Non-payment of service tax - Manpower Recruitment and Supply/Security services - period from January 2013 to January 2014 - reverse charge mechanism - extended period of limitation - Held that:- The bar under Rule 9(i)(bb) of the CENVAT Credit Rules, 2004 is not applicable to the transaction where service receiver is paying service tax under reverse charge mechanism on GAR-7 challan and is taking the credit thereof on the basis of said challan. In the present case, there cannot be any suppression to evade the tax once the assessee is entitled to take CENVAT credit of the same thereby renders the whole situation as revenue neutral - further, mere omission on the part of the appellant has been treated as suppression of facts with mala fide intention to evade the payment of tax which is not justified in law. The appellant after being pointed out by the audit, paid the service tax along with interest and informed the Department vide their letters dated 24.4.2014 and 21.8.2014 and also declared these facts in their ST-3 returns for the relevant period. Therefore, extended period cannot be invoked. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 836 Construction of Residential Complexes u/s 65 (91a) – Duty Demand – Waiver of Pre-deposit - Held that:- The appeal is allowed. Central Excise 2019 (2) TMI 861 CENVAT Credit - inputs - HDPE Pipes - credit denied on the ground that it appeared that these HDPE pipes were only ‘optional’ requirement and are not essential for the functioning of the goods manufactured - Held that:- The HDPE pipes are supplied along with the FO integrated system and the excise duty is also paid on the same - further, in the absence of HDPE pipes, the final product of the appellant is not functional. Analyzing the definition of input as contained in rule 2(k) which include accessories of the final product cleared along with the final product, and it is found that the HDPE pipes are accessories of the final products and is always cleared along with the final product as is reflected in the invoices produced by the appellant. Further in the case of CCE vs. Insulation Electrical (P) Ltd. [2008 (3) TMI 22 - SUPREME COURT], the Hon’ble Supreme Court has held that the difference between the accessories and parts is that accessory is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product, whereas part is an essential component of the whole without which the whole system cannot function. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 860 CENVAT credit - sale of surplus electrical energy to outside power distribution agency or supplied to its own colonies, generated at appellant’s factory premises w.e.f 1.3.2015 - applicability of Rule 6(3) of CENVAT Credit Rules, 2004 - Held that:- This issue has already been decided in favour of the appellant in appellant’s own case M/S. VENKATESHWARA POWER PROJECTS LTD., M/S. THE UGAR SUGAR WORKS LTD., M/S. EID PARRY (INDIA) LTD., M/S. SRI SRIVSGAR SUGAR & AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS & SERVICE TAX [2018 (11) TMI 913 - CESTAT BANGALORE], where it was held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity - credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 859 Clandestine removal - non-submission of proper explanation for clearance of scrap without payment of duty - demand of duty along with interest and also penalty of 25% - period from April 2012 to January 2014 - Time limit of SCN - suppression of facts or not - Held that:- The Commissioner (A) has observed that the appellants have not produced the register for the entire period whereas the appellant submits that they had produced ER-6 Returns, ledger of sale of scrap, statement and purchase of non-cenvatable scrap for the period from 01.04.2011 to 27.01.2013 showing receipt of scrap on which no custom duty was paid and no CENVAT credit availed. - further, the appellants have enclosed register of purchase of scrap without payment of duty for the period from 01.04.2014 to 31.08.2014. The Audit has worked out the duty on the basis of Tally Accountants Software and has not properly examined all the documents produced by the appellants and the demand has been worked on the basis of surmises and conjectures - the impugned order set aside and matter remanded back to the Original Authority to pass a denovo order on the basis of the various records produced by the appellant - appeal allowed by way of remand. 2019 (2) TMI 858 CENVAT Credit - input services - Chartered Accountancy Services - IT service and manpower service for providing maintenance staff at their Mumbai Headquarter - period July, 2016 to March 2017 - denial on the ground that the said services were not used in the manufacturing unit of the appellant which is located in Bharuch, Gujarat - Held that:- It is seen that the CA services and management consultancy services have been claimed to be used for statutory audit and accounting of the operation. Thus, these services are specifically included in the definition of input services. Similarly, insurance advisory service has been claimed to be used for insurance of goods. It is seen that both these services are otherwise covered in the inclusive part of definition of input services. The place where these services have been obtained - the said place is not registered as input service distributor - Held that:- It is seen that the requirement for distribution of input credit would arise only if there are more than one factory premises in respect of which the input services are received at a place. In the instant case, the appellant have only one factory premises and thus, the question of distribution of input credit does not arise. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 857 Clandestine removal - adjustment of shortages and excesses of different products - Short paid duty - motor spirit (petrol) - High Spirit Diesel (HSD) - Furnace Oil (FO) - Super Kerosene Oil (SKO) - the quantity dispatched was more than the quantity received - Held that:- The said issue has been decided by Tribunal in the appellant’s own case in identical circumstances M/S. INDIAN OIL CORPORATION LTD VERSUS C.C.E. & S.T. -VADODARA-I [2018 (10) TMI 468 - CESTAT AHMEDABAD], where it was held that It is clear from that the direction was to reconcile excess and shortages against each other and if still there is shortage then the same needs to be charged to duty at highest rate in term of Clause (h) of the circular, after adjusting for permitted losses. The matter is remanded to the original adjudicating authority for fresh decision following the aforesaid decision of the Tribunal in appellant’s own case - appeal allowed by way of remand. 2019 (2) TMI 856 SSI Exemption - use of housemark - brand name or not - the appellant affixed logo AMTECH to the goods manufactured by them. During the investigation it was found that another Company M/s. Amtech Electronics (India) Limited affixed the same logo AMTECH to the goods manufactured by them - Held that:- Though the appellant have strongly argued that the appellant are using the house mark, therefore, the SSI exemption cannot be denied merely by using their own house name. However, on perusal of the name and design, we find that the logo AMTECH in a particular design is same and the same is affixed on the product by M/s. Amtech Electronics (India) Limited as well as on the appellant product - If at all the appellant had intention to use the AMTECH as their house name, it should not be in the same font and design as was used by M/s. Amtech Electronics (India) Limited . Therefore, it cannot be said that the AMTECH logo used by the appellant is a house name whereas being a specific design and in specific font with common design of AMETCH used by both the companies cannot be treated as house name but the Brand name as defined under Notification No. 9/2002-CE. In the present case, the monogram in a particular design and in a particular writing being used by M/s. Amtech Electronics (India) Limited much before the incorporation of the appellant company, therefore, the same logo/ monogram used by the appellant is clearly the use of brand name of another company. As regard, the ownership of AMTECH even though it is not registered with M/s. Amtech Electronics (India) Limited, they are unregistered owner of name, logo/monogram, AMTECH , for the reason that the Amtech Electronics (India) Limited is in existence, since, 1987 and appellants company was incorporated in 1997, therefore, M/s. Amtech Electronics (India) Limited being a prior user of monogram AMTECH they are the owner of AMTECH brand. Time Limitation - Held that:- The appellant in the declaration simply mentioned the description as AMTECH make but it is bearing monogram of AMTECH in a particular design and writing. This fact was not disclosed in the declaration or otherwise by the appellant to the department, therefore, there is a suppression of fact on their part. The appellant is not entitled for SSI exemption N/N. 9/2002-CE. - Appeal dismissed - decided against appellant. 2019 (2) TMI 854 Refund of unutilized CENVAT credit - services used for export of goods - insurance service - setting-up of Effluent Treatment Plant - denial on account of nexus - N/N. 27/2012-CE dated 18.06.2012 read with Rule 5 of CCR, 2004 - Held that:- Insurance undertaken in the present case relates to ‘commercial general liability insurance’ which covers the general business risk and not for coverage of claims related to accidents and to personal injury and personal medical expenses. - the insurance covering ‘commercial general liability’ and Marine policy falls in the definition of ‘input service’ and CENVAT credit is available to the appellant. Denial of refund of ₹ 3,03,240/- for setting-up of ETP - Held that:- Both the authorities have mis-interpreted the exclusion clause provided in input service w.e.f. 01.04.2011. Both the authorities have considered the setting-up of ETP as construction service and therefore is not covered under the definition of ‘input service’ - the setting-up of ETP is a statutory requirement for carrying out the manufacturing activity and therefore, the ETP is an integral part of manufacturing setup and setting-up of the ETP is covered under the scope of ‘input service’ as defined in CCR, 2004; therefore rejection of the refund claim on these services is also not tenable in law. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 853 100% EOU - Refund claim - suo moto availment of CENVAT Credit - Rule 8(3A) of Central Excise Rules, 2002 - Held that:- The appellant did not pay the excise duty on the DTA sale for the period February 2012 to December 2012 to the extent of ₹ 26,14,940/- and on being pointed out, the appellant paid the duty on 15.2.2013 by using the CENVAT credit but the Department raised the objection of payment through CENVAT credit in view of Rule 8(3A) of the Central Excise Rules. Thereafter, the appellant paid the duty by cash and took re-credit of the CENVAT credit account, for which the Department issued the show-cause notice. Once Rule 8(3A) has been declared as unconstitutional which means that the payment made by the appellant on 15.2.2013 itself was correct and there was no requirement to pay the same again in cash but having been paid the same by cash again, the appellant is entitled to get back this amount paid by cash and as per the provisions of Section 142 of CGST Act, the appellant is entitled to get the refund in cash if the same arises on account of the litigation. Refund allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 852 Job work - Reversal of CENVAT Credit - manufacturing of intermediate product undertaken by them and in respect of which they have claimed exemption N/N. 214/86-CE. - job work activities conducted by them for principal manufacturer - applicability of Rule 6 of Cenvat Credit Rules - Held that:- The issue is squarely covered by the decision in the case of D.M. Brass Extrusion and others [2018 (6) TMI 1420 - CESTAT AHMEDABAD], where it was held that As per 3rd Proviso to Rule 3(1), Even though the goods manufactured under Notification 214/86- CE, the CENVAT Credit in respect of inputs used in the said goods is admissible. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 851 Benefit of reduced penalty - short-payment of Central Excise duty by not adopting valuation as per Section 4A of Central Excise Act, 1944 - automotive glass cleared to certain customers in packaged condition during the period September 2009 to November 2013 - penalty on Director of the Company - Held that:- Both the authorities have not considered the amendment which was effected in 2015 by Finance Bill 2015 wherein the provisions with regard to payment of reduced penalty of 15% was introduced. Further, in the present case, the Deputy Commissioner passed the Order-in-Original on 30/06/2015 whereas the reduced penalty equivalent to 15% of duty was paid by the appellant on 01/06/2015 which was well within a period of 30 days from the passing of the Finance Act, 2015 on 14/05/2013. Therefore in view of the amended provision, the appellant was entitled to the benefit of reduced penalty. Penalty on Director of the Company - Held that:- Once the proceedings against the main noticee i.e. the company are concluded on payment of reduced penalty of 15%, the proceedings against the co-noticee stands concluded. Impugned order set aside by allowing the appeals of the appellants insofar as the imposition of penalty in excess of reduced penalty of ₹ 46,923/- already paid and personal penalty of ₹ 1 lakh on the Director - appeal allowed. 2019 (2) TMI 850 CENVAT Credit - capital goods - structural steel items as that of Ms angle, Ms channels, Ms joists, chequered plate, etc. - denial of credit for want of proof to have been used in or in relation to the manufacture of capital goods or components, spares and accessories of the capital goods - Held that:- If such structures satisfies the “user test” principle as appreciated by Hon’ble Apex Court in Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] case, all these structural items are as good as spare parts of the capital goods as mentioned in Clause 3 of Section 2(a) of Cenvat Credit Rules, 2004 and thus are eligible inputs/ capital goods for availing credit. The final product in the present case is the sponge iron for which the kiln, burning chamber, conveyor gallery, fabrication of walkways of platform, staircases, shed, etc. are the essential machineries. As per appellant, none of these machinery can put to use unless and until the impugned structure is there to support the said machinery as the machinery cannot be held suspended in the air. Thus, these structures are not merely the structural support to these machines but very much become the integral part of these machines manufacturing the final product. Once, the documents in the form of certificates and even in the form of designs and layout were already produced on record at the first stage of litigation it was highly unreasonable on part of the Commissioner(Appeals) to reject the Appeal merely on the ground of lack of the primary evidence as that of Chartered Engineer’s Certificate, designs and layout etc. The impugned steel articles, the way they have been used to for the kiln, after burning chamber, conveyor gallery, fabrication of walkways of platform, staircases, shed, etc., the machines for manufacturing final products they are as good as the component/ spare/ accessories to such machines and as such are the available inputs for the cenvat credit as has been availed by the appellant - Appeal allowed - decided in favor of appellant. 2019 (2) TMI 849 Refund of excise duty - duty paid under protest - refund by utilization of CENVAT Credit - rejection on the ground that the appellant could not have claimed cenvat credit on inputs for a product that was exempted from payment of duty - principles of unjust enrichment - Held that:- In the present case, the Department itself required the Appellant to pay excise duty on the drugs by not accepting the claim of the Appellant that it was exempted from payment of excise duty. It is not the case of the Department that payment of excise duty could not have been made by utilizing the Cenvat Credit if the goods were not exempted and this is the reason why no objection was raised by the Department when excise duty was paid by utilization of Cenvat Credit. It is, therefore, not open to the Department to now contend that since the final product has been exempted from payment of excise duty by the Tribunal, Cenvat Credit could not have been utilized for payment of excise duty. Principles of unjust enrichment - Held that:- In the face of documentary evidence available on record, namely, copies of the invoices indicating that the incidence of duty had not been passed on, the certificates given by the Chartered Accountant and the ER-1 returns filed by the Appellant, the Commissioner (Appeals) could not have held that the incidence of duty had been passed on to the customers merely on account of the statements contained in the Profit & Loss A/c. The finding, therefore, that the claim for refund was hit by doctrine of unjust enrichment cannot be sustained. The accounting disclosure contained in the Profit & Loss A/c, cannot conclusively prove that the incidence of duty had been passed on to the customer. The learned Representative for the Department has, however, placed reliance upon the decision of the Principal Bench of the Tribunal at New Delhi in the case of Ranbaxy Laboratories Ltd. vs CCE, Chandigarh, [2010 (4) TMI 390 - CESTAT, NEW DELHI], to contend that the Cenvat Credit scheme is available only if the final product suffers the excise duty. This decision is clearly distinguishable and in any view was reversed by the Himachal Pradesh High Court in Ranbaxy Laboratories Ltd. vs CCE, Chandigarh, [2012 (4) TMI 369 - HIMACHAL PRADESH HIGH COURT]. Issuance of SCN u/r 14 or CCR - Held that:- When no show cause notice was issued by the Department to the Appellant under Rule 14 of the Cenvat Credit Rules, 2004 for denying the Cenvat Credit, the claim of the Appellant for refund of excise duty paid through Cenvat Credit cannot be denied for the reason that Cenvat Credit could not have been availed of. In proceeding for deciding refund of excise duty, the eligibility of Cenvat Credit cannot be examined - The High Court examined the provisions of Rule 14 of the Cenvat Credit Rules, 2004 in (Commissioner, Service Tax Commissionerate, Noida vs M/s HCL Comnnet System & Services Ltd., Noida [2017 (12) TMI 1661 - ALLAHABAD HIGH COURT] and observed that in the absence of a notice under Rule 14, action taken to reject the claim is bad in law. The claim of the Appellant for refund of excise duty paid through Cenvat Credit could not have been denied - However, this order will not prohibit the Department from issuing a notice under Rule 14 of the Cenvat Credit Rules, 2004, if it is now permissible in law - appeal allowed - decided in favor of appellant. 2019 (2) TMI 848 Method of Valuation - section 4 or 4A of CEA - manufacture of ice creams of various flavours in different quantities and with different brand names - Sale to hotels/ parlours/ caterers in 50 ml & 100 ml packs but packed differently without any RSP - Held that:- The assertion of the assessee is that these 50 ml and 100 ml packs are different from those sold to individual customers and are not meant for sale but meant for use in hotels/ caterers as a part of food package which they sell. There is nothing on record to show that these 50 ml & 100 ml packs are printed with MRP and are meant for sale. There is no reason to suspect that the 50 ml and 100 ml packs are not different from packs of similar sizes meant for sale - valuation rightly done u/s 5 of CEA - Appeal dismissed - decided against Revenue. 2019 (2) TMI 847 Quantum of redemption fine and penalty - removal of electric fans from factory to godown without payment of duty - contravention under Rule 25 Clause (c) and (d) of CER - Held that:- Removal from the factory to its godown is not an act of fraud, collusion, suppression etc. to evade payment of duty since, had it been sold to third parties, the same would have amounted to an act against the Government scheme. Even the Revenue has not made out any case that the goods so removed as above have been found to be diverted and thereafter to be sold elsewhere. Thus, the only infraction of removal of goods without prior permission, is only a procedural lapse, which cannot take the characteristic of clandestine removal with intent to evade duty especially, when the goods are otherwise non-marketable. The procedural breach would be best served by limiting the redemption fine to ₹ 50,000/- as well as penalty to ₹ 50,000/- - appeal allowed in part. 2019 (2) TMI 846 CENVAT credit - write off of inputs/capital goods on which CENVAT credit availed - obsolete stock - Held that:- There cannot be two opinions that the appellant had required to pay the amount equivalent to the CENVAT credit availed as soon as the inputs/capital goods written off by them and they did not. If they had used some or all materials from which they had reverse the CENVAT credit subsequently there could have taken credit of such amount as per the proviso. Therefore, there is no infirmity in the lower authority confirming the demand and the First Appellate Authority upholding the demand along with interest and penalties. However, the appellant now submits that they have documents to show that they have subsequently used the written off material. This requires a detailed examination of the documents and re-calculation of the amount of credit to be reversed and interest as well as the penalties - appeal allowed by way of remand. 2019 (2) TMI 845 CENVAT Credit - capital goods - structural items i.e. MS channel, MS beams, angels, coils under Chapter 72 & 73 - scope of SCN - Held that:- The show-cause notices were issued to the appellant alleging that the appellant has availed CENVAT credit on duty paid on HR sheets, coils, plates, angles as capital goods which are used for fabrication of structural parts for capital goods whereas the appellant authority has travelled beyond the scope of show-cause notice inasmuch as there was no requirement in the show-cause notices for producing documentary evidences for usage of the goods. The credit has been denied for the reason of non-submission of documents whereas the showcause notice itself confirms the usage of the capital goods. In the case of Renuka Sugars Ltd. Vs. CCE [2017 (5) TMI 47 - CESTAT BANGALORE], the Tribunal has considered various decisions of the Tribunal and the High Court and has come to the conclusion that various items like angles, channels, beams etc. are eligible for CENVAT credit if they are used for repair and maintenance of building or even for fabrication of structures. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant. 2019 (2) TMI 844 Reversal of CENVAT Credit - such Ingot Moulds were cleared by issue of trade invoices describing them as “Rejected/Defected Ingot Moulds” without reversal of cenvat credit availed on such capital goods - Rule 3 (5) of the Cenvat Credit Rules, 2004 - Held that:- The legal provision dealing with the clearance of capital goods, after availing the cenvat credit, is covered by Rule 3(5) ibid. This sub-rule provides that cenvat credit availed on capital goods is required to be reversed at the time of removal of capital goods “as such”. It is further seen the above sub-rule was further amended by Notification No.39/2007-CE (NT) dated 30.11.2007, by which, a proviso was inserted to specify that in respect of clearance of capital goods, after being used, the manufacturer was required to reverse the amount equal to the cenvat credit taken, reduced by 2.5% for each quarter of year or part thereof - the period of dispute is prior to insertion of proviso above. The identical issue stands decided by the Hon’ble Karnataka High Court in the case of Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT]. While ordering that there is no need for reversal of cenvat credit availed on capital goods, if cleared after use. There is no justification for imposition of any penalty on the Director, Shri Ashok Kr. Agarwal. Hence, penalty is also set aside. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 843 Valuation - clearance to job worker of Lux Toilet Soaps for bundling/repacking in to 12 units a pack - cost construction method in terms of Rule 6 (b) (ii) of the Valuation Rules - It is the case of the appellant that Statutory Returns being RT-12 were filled from time to time declaring the semi finished goods - valuation under Rule 6(b)(i) of the Valuation Rules - from 01/11/1997 to 31/03/1998 - SCN was issued on 12/03/1999 - Held that:- The issue is no more res-integra in view of the decision of the Tribunal in the case of Cadbury India Ltd. Vs. Commissioner of Central Excise, Pune-I [2013 (9) TMI 130 - CESTAT MUMBAI], where it was held that This case of repacking of one type of retail pack into another type of retail pack-assortment pack called “Celebrations” by a job worker cannot be called bulk sale to an intermediary for further sale or distribution in smaller quantities - appeal dismissed - decided against appellant. 2019 (2) TMI 842 Valuation - Compounded Levy Scheme - Annual Capacity of Production - section 3A of the Central Excise, Act, 1944 - demand of differential duty - Held that:- Government notified the Scheme of Compounded Levy Scheme under Section 3A for induction of furnace units as well as re-rolling mills w.e.f. 1/09/1997. In terms of this scheme, the Annual Capacity of Production is required to be fixed by the Jurisdictional Commissioner and the assesses were required to dis-charge their duty liabilities in terms of such production capacity fixed. In those cases, where the assesses are of the view that the ACP fixed in terms of the scheme is unreasonably high and the Actual Production is far lower, Section 3A (4) provides for the assessee to file an application to the Commissioner for re-fixing the ACP. Such application was moved by the appellant through their letter dated 15/07/1998 against the capacities fixed by the Commissioner vide this order dated 28/4/1998. The present proceedings is against the order passed by Commissioner in the denovo proceedings. However, it is seen that he has re-fix the capacity as done in his initial order dated 28/04/1998. He has declined to consider the plea made by the appellant to re-fixe the capacity keeping in view of the actual production figures recorded in RG-1. After considering the various factors claimed to be impacting production of both ingots as well as the rolled products, we are of the view that the fixing of Annual Capacity of Production simply on the basis of the formula will be unfair to the appellant. As such, the capacity is required to be re-determined as per the provisions of Section 3A (4) - The Commissioner is required to re-fix the capacity of production after considering the evidence produced by the assessee in support of his claim for lower production- appeal allowed by way of remand. CST, VAT & Sales Tax 2019 (2) TMI 841 Conditional order for the grant of stay with regard to penalty - AP VAT ACT, 2005 - Held that:- There is no merit in the SLP - The Special Leave Petition is dismissed. 2019 (2) TMI 840 Levy of sales tax - inter-state transfer or not? - discretionary jurisdiction under Article 226 of the Constitution - Held that:- Admittedly the goods were transported to be sold within the State of Kerala. The goods were also released to the transporter and since the same has not been taken back outside the State through the check post, there is a presumption that it has been sold within the State of Kerala. The release having been effected by the transporter, necessarily the transporter is liable to sales tax, leviable within the State of Kerala - appeal dismissed. 2019 (2) TMI 839 Rate of tax - omission to disclose certain purchases - uniform rate of tax at 14.5% or not? - the core contention is that while levying the tax, the assessing officer ought to have levied only the applicable rate of taxes. On the other hand, the second respondent had levied a uniform of rate of tax at 14.5% - Held that:- It is not in dispute that there has been an omission on the part of the petitioner to disclose the purchase made by them. It is also not in dispute that the second respondent is posted with all the purchase details. When the second respondent is having the relevant invoices and is also aware or the applicable rate of tax, the second respondent ought to have levied only at the applicable rate of taxes. But in this case, the second respondent has chosen to levy tax at an uniform rate of 14.5%. This in my view is clearly unreasonable and vitiates the proceedings. This Court cannot fail to take note of the petitioner's conduct. When a question was posed as to whether the petitioner had remitted atleast the demanded tax as per their own calculation, the learned counsel for the petitioner submitted that the petitioner had already paid more than ₹ 44 Lakhs which is more than the admitted tax amount - second respondent will give an opportunity of personal hearing to the petitioner and pass order afresh and in accordance with law - petition allowed. Wealth tax 2019 (2) TMI 838 Reopening of wealth tax assessment - cash in hand appearing in balance sheet - Held that:- The assessee is a proprietary concern. The cash balance generated out of trading activity is treated as business asset and as such, business asset was not to be treated as cash in hand within the meaning of section 2(ea)(vi) of the Act. In our considered opinion, we hold that cash in hand referred to in section 2(ea)(vi) represents only the personal cash of the assessee emanating from his personal balance sheet. It nowhere contemplated the inclusion of cash which is held as business asset. Admittedly, the impugned cash in hand represents the cash belonging to business of the assessee and thereby partakes the character of business asset. Therefore, in our considered opinion, this ground of appeal of the assessee is allowed. In respect of property No. B-21/11 Gitanjali, New Delhi, it was an urban land and the construction was not allowed due to the illegal construction made by other co-owners. The AR of the assessee was unable to substantiate with cogent documentary evidence that the said property was being used for godown. The sanction plan was rejected because of the failure of MCD byelaws. If the assessee or the co-owner would have removed the encroachment or illegal construction of the property, the plan would have been sanctioned in favour of the assessee. Therefore, the plea of the assessee that construction is not permitted in the impugned plot is not tenable and rejected. No any evidence is placed before us to substantiate that the said property was being used for commercial purpose. Therefore, the ld. CIT(A) after considering the submissions of the assessee has rightly given relief to the assessee to the extent of loan taken from Allahabad Bank against this property. This ground is rejected. In respect of property No. C-5/34, SDA, New Delhi, it is evident from record that the property was purchased as per sale deed dated 20.03.2006 from Ashok Kumar Jain who had purchased it from late Mr. Anil Roy Chowdhary. The assessee submitted a bill issued by Royal Security Services (PB-42). The period of services is only for 22.03.2006 to 31.03.2006, but no any proof of payment made to this security services is produced. The case is for F.Y. 2005-06. Therefore, the contention of the assessee that the impugned property was being used for the purpose of business is not acceptable. The title deed of the property is in the name of assessee and there is no adverse order againt the assessee to dispute the title of the assessee. Therefore, the ld. CIT(A) has rightly decided this issue against the assessee. Indian Laws 2019 (2) TMI 837 Smuggling - poppy husk - offences punishable under Section 15(c) and 8(c) of the Narcotic Drugs and Psychotropic Substances Act, 1985. Held that:- In the instant case, there is nothing on record to suggest that these Rules were followed while producing case property in the Court and on returning the same. These Rules have been framed to ensure that case property from its initial stage of seizure till production in the Court remains safe/intact and is restored to store room in the presence of senior police officer. Property taken out of the main store-room for production in court is required to be signed by the court orderly concerned in Register No. 2 and the prosecuting officer authorizing the removal is required to initial this entry. Such officer shall similarly, after personal check, initial the entry of return of the property to the main store-room on the closing of the courts. Their Lordships of the Hon'ble Supreme Court in Sukhdev Singh vs. State of Haryana, [2012 (12) TMI 982 - SUPREME COURT] have underlined the objects and purpose of ensuring strict compliance of Section 42. Their Lordships have held that Section 42 is mandatory which ought to be construed and complied with strictly. The compliance of furnishing information to the superior officer should be forthwith or within a very short time thereafter and preferably prior to recovery. Appellants are acquitted. Appellant Harbhajan Singh alias Bhajan Singh is on bail. His bail bonds and surety bonds are discharged. Remaining accused are in custody. They be released forthwith - appeal allowed - decided in favor of appellant.
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