Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 18, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST evasion / input tax credit - Jurisdiction - power of inspection, search and seizure of Police / authorities - without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act.
Income Tax
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Computation short term capital gain (STCG) - allocation of Portfolio Management Services (PMS Charges) towards Dividend and interest income - the basis of allocation of PMS charges as done by the Assessee is correct and deserves to be accepted
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Exemption u/s 11 - in case of Charitable Trust excess expenditure over income is to be allowed to be carried forward for setting off against income of subsequent years. Thus the deficit of this year is allowable to assessee for set off in subsequent years.
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TP Adjustment - Non follow procedure u/s.144C - Non referring to TPO - only draft assessment order passed - Draft assessment order cannot be treated as final assessment order simply by way of issuing corrigendum and since no final assessment order has been passed as on 31.03.2014 and only draft assessment order has been passed, therefore, the said draft order has no consequence and is null and void.
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Disallowance selling expenses incurred in respect of sale of land - payment was made in cash in violation of the provision of sections 269SS and 269ST - payment was made to avoid any legal dispute - Additions confirmed.
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Validity of the assessment order u/s 153A for want of approval under section 153D - no prior approval under section 153D by JCIT/Addl. CIT before passing the impugned assessment order have been obtained. A.O. was not competent to pass the assessment order u/s 153A .
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Notice u/s 143(2) - period of limitation - defective return filed u/s 139(1) - upon such defects being removed, the return would relate back to the date of filing of the original return, that is, 10.09.2016 and consequently, the limitation for issuance of notice u/s 143(2) would be 30.09.2017, viz. six months from the end of the financial year in which the return u/s 139(1) came to be filed.
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Waiver of interest u/s 234B - The petitioner had failed to pay advance tax by wrongly claiming business loss/depreciation loss during the assessment years 1988-89 to 1990-91. Therefore it cannot be stated that the petitioner was entitled to the benefit of the above notification issued u/s 119(2)(a) of the Income Tax Act, 1961.
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Allowable expenditure under Section 37(1) - protective assessment / additions - The question of making protective demand based on the assessment of the person who paid the amount the petitioner appears to be incorrect as assessment cannot be made subject to outcome of collateral proceedings of another person.
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Reopening of assessment u/s 147 - The approval granted and the reasons which made the Income Tax Officer to believe that some income had escaped assessment have to be tested with regard to the actual facts and figures. This comes within the scope of alternative remedy by way of appeal and no prejudice can be stated as caused to the Appellant/Assessee in this regard.
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Exemption u/s 11 - section 2(15) Applicability - Carry forward and set off of unabsorbed deficit - the assessee is entitled to claim set off of brought forward excess application (deficit) during the year under consideration.
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Interest received u/s 28 of the Land Acquisition Act - Income from other sources - The income is to be brought to tax in terms of section 56(2)(viii) - CIT(A) has rightly dismissed the appeal of assessee
Customs
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Maintainability of Settlement Commission - applicability of Section 123 of CA on cigarettes - by no stretch of imagination it can be said that the Settlement Commission had any power, jurisdiction and authority to decide an application preferred by the respondent under Chapter XIV of the Customs Act, 1962.
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Purchase from 100% EOU and export - 100% EOU are not entitled for export incentives and exemption - Vishesh Krishi Upaj Yojna - the medium of the appellant cannot be used to avoid the intended purport of the policy - the export-oriented units cannot use the appellant for export under the Scheme and to claim benefit of export when it is not permissible for them directly.
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Calculation and Recovery of customs duty - auction sale of warehoused goods - the custom duty has to be paid on the basis of sale proceeds realised from the sale of the goods kept in a warehouse and not on the basis of the custom duty payable at the time of filing the Bill of Entry or on the date of expiry of permitted period of warehouse.
Indian Laws
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Dishonor of Cheque - Non-compliance with the mandatory provisions as contained in Section 202(1) of the Code of Criminal Procedure cannot be considered to be a ground for quashing the proceedings pending against the petitioners. However, at the same time it cannot be ignored that the process under Section 204 Cr.P.C. was issued without taking care of that provisions.
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Dishonor of Cheque - section 138 of NI Act - enforceable debt or not - Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹20,000/-. Thus, any person violating the same would attract imposition of penalties under the said Act. However, the same does not render the said debt un-enforceable or precludes the lender from recovering the same.
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Dishonor of Cheque - insufficiency of funds - taking into consideration even the provision of Section 147 and the primary object underlying Section 138, in our judgment, there is no reason to refuse compromise between the parties.
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Stamping of Lease deeds - The High Court has totally erred in relying on the lease deed dated 12.3.1997, which was found to be insufficiently stamped and brushing aside the report of the Registrar (Judicial), when the respondents had failed to pay the insufficient stamp duty and penalty as determined by the Registrar (Judicial) of the High Court of Karnataka
Service Tax
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Business auxiliary service and GTA services provided under two different firms name separately - composite service or not - Both GTA services and business auxiliary services have separate entries in section 65 of the Finance Act, 1994. To allege that services rendered by two different firms, may be for the same client, merely on the ground that both are co-located and are owned by the same person, in our view, is not correct.
Central Excise
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Marketibility/excisability - Milk Crumb - There is no dispute with regard to the shelf life of the product. Shelf life of the product is one of the determinant of the product being marketable. If some product is having no shelf life or a very short shelf life, then the same could not be held to be marketable as has been held in the decision of the Apex Court in the case of Moti Laminates. That is not the case here.
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Revenue neutrality - If the issue was revenue neutral, the respondent would have paid the duty and taken the credit whatsoever, if the same was admissible. Secondly revenue neutrality can never be ground for not demanding the duty on the excisable goods in the form and manner they are being cleared by the assessee.
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CENVAT Credit - capital units - lifting of Corporate Veil - all units have been merged at a later date, though at the time of receipt of capital goods, all the three units were separate entities and the goods were received and owned by M/s. JSWPL - The legal position is that, the ownership of the goods cannot be the criteria for denying the CENVAT credit.
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CENVAT Credit - The input service credit cannot be denied on the ground that it is shown in the ER1 return instead of the ST3 returns since the cross utilization of credit of input and input service is permissible and cenvat credit on input, capital goods and input services used in the manufacturing goods or providing output service is available in common pool and cenvat credit taken during the period shown in ER1 or ST3 return would be the same and there is no restriction on utilization of the common input credit.
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CENVAT Credit - capital goods - immovable goods or not - fabrication of Goliath Crane, Jib Crane, Gantry Crane, Electric Overhead Travelling (EOT) Crane, etc., which are embedded to earth - merely because they may have to be dismantled to be shifted out of the respondent's premises does not make them immovable property.
VAT
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Imposition of penalty under Section 54(1) (14) of UP VAT Act - The Tribunal has only observed that non-filing of various columns in Form 38 indicates that there was intention to evade tax and only this ground rejected the appeal of the assessee. The Tribunal has not correctly applied the law in this regard, as they have not given any finding about the intention to evade tax, which is a precondition for imposition of penalty
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The contention of the petitioner that for the purpose of pre-deposit under Section 51 of the TNVAT Act, 2006 an assessee can utilise the excess Input Tax Credit provided accepted, the aforesaid Input Tax Credit itself is not the subject matter of the dispute or where any notice has been issued to deny such tax credit - To deny such right would amount to improper denial of right of appeal to an assessee
Case Laws:
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GST
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2020 (2) TMI 743
Review petition - Appointment of 'Proper Officers' without any notification in the gazette as envisaged under Section 167 read with Section 168 of the Central Goods and Services Tax Act, 2017 - Sustainability of Annexure P/2 Gazette Notification dated 01.07.2017 - Annexure P/1 Circular dated 05.07.2017 - rectification of mistake - error apparent on the face of record - HELD THAT:- After the hearing held on 16.10.2019, they were taken up reserving judgment. In the course of working up the position, this Court came across a 'Corrigendum Notification dated 29.07.2019' published in the official Gazette (as noted in paragraph 21 of the judgment) whereby the mistake occurred in Annexure P/2 Notification dated 01.07.2017 (to the effect that the said Notification was issued by the Board) was corrected as issued 'by the Government'. The contention raised by the Respondents as to the circumstances under which the appointment of Proper Officers in different parts of the country is necessitated; the contention that the scope and applicability of Section 6 of the CGST Act is more with reference to 'assessment', which is not the purpose of appointing Proper Officers in different parts of the country conferring power to detect mischief/foul-play (wherever that is committed by unscrupulous assessees) and the specific contention that if at all there is initiation of simultaneous proceedings by two different officers in respect of the same cause of action, it will always be open for the assessee to bring it to the notice of the officer who has taken parallel action to avoid parallel proceedings, have been upheld. Since this Court has upheld that above contentions of the Respondents, repelling the contentions raised by the Writ Petitioners to the contrary, there is no error apparent on the face of record, to invoke the power of review. It is quite evident that the attempt of the Review Petitioners is only to have a re-hearing of the matter, which is not permissible in exercise of the power of review. The 'review power' can be invoked only when there is any 'error apparent on the face of record' and it is not a substitute for appeal as made clear - because of non-bringing of the 'Corrigendum Notification' dated 29.07.2019 to the notice of this Court and in making incorrect submissions, much of the Court's time has already been wasted by the Petitioners, which could have been utilised for other fruitful purposes. Petition dismissed.
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2020 (2) TMI 742
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 741
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (2) TMI 740
GST evasion / input tax credit (ITC) - Jurisdiction - power of inspection, search and seizure of Police / authorities - input tax credit availed in excess of the entitlements - Section 67 of the GST Acts - HELD THAT:- From the provisions of Section 67 of the AGST Act and 100 and 101 of the Customs Act, a process for search, seizure, confiscation etc for violating any of the provisions of the AGST Act or the Customs Act can only be initiated upon having reasons to believe by the proper or appropriate officer that a person concerned was involved in violation of any of the provisions of the GST Acts or the Customs Act - In the instant case, the documents made available on record so far as it relates to violation of the provisions of the AGST Act are not being relied upon by the respondents to indicate any such violation of the provisions of the AGST Act. What is contended is that some such documents are either fraudulent or it contains forged signatures resulting in offences under Sections 120(B)/420/467/471 of the IPC. If the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the AGST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly. But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act. The detained/seized goods be retained by the police authorities of Assam for a period of seven days from today. In the meantime, the GST authorities of the Government of Assam, the police authorities of the Government of Assam and the Customs authority of the Customs Department, Government of India shall take their respective decisions on how to proceed with the matter of the detained/seized trucks of areca nuts within the period of seven days - Appeal disposed off.
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Income Tax
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2020 (2) TMI 739
Assessment u/s 153C - Delayed recording satisfaction note - HELD THAT:- No reason to interfere in the matter as there is considerable delay in filing the petition. The special leave petition is dismissed on the ground of delay, leaving all the questions of law open.
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2020 (2) TMI 738
Reopening of assessment u/s 147 - approval granted in terms of the Section 151 (1) to reopen the assessment and to quash the notice issued u/s 148 after holding that the statutory requirement has been complied with and accordingly relegating the writ Petitioner to avail the statutory remedy by way of appeal - HELD THAT:- When the procedural requirements are satisfied, whether the inference drawn is based on the relevant materials or not is a matter which may involve a fact adjudication. This is not possible at the hands of this Court, in exercise of the jurisdiction under Article 226 of the Constitution of India. The nature of contentions raised by the Appellant/Assessee is with regard to the satisfaction of the reasons for reopening the assessment after four years. The approval granted and the reasons which made the Income Tax Officer to believe that some income had escaped assessment have to be tested with regard to the actual facts and figures. This comes within the scope of alternative remedy by way of appeal and no prejudice can be stated as caused to the Appellant/Assessee in this regard. To put it more clear, it is not a case where mere question of law is involved; such as violation/non-satisfaction of the particular provisions or as to lack of competency of the authority who has passed the order for proceeding further. Respondent/Revenue submits that assessment proceedings were finalized in respect of 'five' different assessment years and hence five different writ petitions came to be filed by the Appellants/Assessee. Among the 'five', two writ petitions have already been withdrawn and the Assessees have chosen to avail the statutory remedy. As it stands so, no differential treatment is warranted in respect of the present appeals. We hold that these appeals are not maintainable and accordingly they are dismissed. This is without prejudice to the rights and liberties of the Appellants/Assessee to move the statutory authority by way of appeal in accordance with law. It is further made clear that, our discussion is only to the extent of considering the maintainability and no opinion is expressed with regard to the merits involved.
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2020 (2) TMI 737
Reopening of assessment u/s 147 - Defective notice - no whispering in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly material facts - HELD THAT:- The impugned notices under Section 148 and the proceedings under Section 147 are not sustainable in law and should be quashed for the reason that admittedly impugned proceeding initiated under Section 147 and notices issued under Section 148 which were issued after the expiry of four years from the end of the relevant assessment year and in view of the fact that there is no whispering in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly material facts for assessment and in view of the fact that the Assessing Officer could not establish that the information of alleged escaped income was not within his knowledge and was not considered at the time of passing of the assessment order under Section 143 (3) and it came to his knowledge subsequent to the assessment order passed under Section 143 (3) of the Income Tax Act, 1961 and that subsequent decision of the Hon ble Supreme Court reversing the legal position prevailing at the time of regular assessment cannot be called an omission or failure on the part of the assessee in disclosing fully and truly the material facts necessary for relevant assessment. Writ Petition is allowed and the impugned proceeding under Section 147 and notices dated March 26, 2014 under Section 148 of the Income Tax Act, 1961 are quashed.- Decided in favour of assessee.
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2020 (2) TMI 736
Authority and jurisdiction of the concerned Income Tax Officer (TDS) - HELD THAT:- The impugned notices dated 10th April 1997 and 26th May, 1997 have been issued without jurisdiction and authority of law. The concerned officer being the respondent no.1 had no jurisdiction whatsoever at that relevant point of time to issue such notices. Such notices are accordingly quashed and set aside. Even though the said notices impugned in this proceeding are quashed and set aside, the same would not preclude the Income Tax Authorities to take appropriate steps in accordance with law to initiate appropriate proceedings in respect of the disputes that were urged and formed the subject matter of the impugned notices. For the purposes of limitation, in case such proceedings are initiated and steps are taken accordingly, the concerned assessee being the petitioner is precluded from raising the plea of the limitation and for the purposes of limitation, the relevant date would be the date of this order. Revenue Authorities would also be entitled to rely upon the principles enshrined in Section 14 of Limitation Act, 1963 in this regard
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2020 (2) TMI 735
Stay petition - Recovery of outstanding tax demands - petition for stay of collection is hereby rejected on the ground that mere filing of appeal before the CIT(A) is not a valid reason for stay of collection - HELD THAT:- As relying on MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR [ 2019 (3) TMI 1 - MADRAS HIGH COURT] the impugned order is set aside. The petitioner is granted liberty to approach the appellate authorities with an application for stay of recovery within a period of two (2) weeks from today and the Appellate/Administrative Commissioner will, after hearing the petitioner, dispose the stay application in accordance with law and after taking into consideration the three fold aspects of prima facie, financial stringency and balance of convenience within a period of three (3) weeks thereafter by way of a speaking order. There shall be an order interim stay of recovery of the disputed demand till disposal of the stay application to be filed by the petitioner before the Appellate/Administrative Commissioner. It is made clear that if the petitioner does not file an application for stay within a period of two (2) weeks from today, then, order dated 05.02.2020 will automatically stand revived.
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2020 (2) TMI 734
Allowable expenditure under Section 37(1) - protective demand based on the assessment of the person who paid the amount - HELD THAT:- The question of making protective demand based on the assessment of the person who paid the amount the petitioner appears to be incorrect as assessment cannot be made subject to outcome of collateral proceedings of another person. Assessment has to be completed based on the accounts of the petitioner. It cannot be left open ended as has been done in the case of the petitioner. Since the assessment procedure adopted by the assessing officer for the petitioner was not proper order and had left it open ended,it is of the view, it was also unsustainable and is therefore liable to be quashed. Therefore, the consequential orders passed by the respondents against the petitioner based on collateral proceedings in the case of M/s. Eastman Exports Global Clothing Private Limited are also liable to be quashed and the case should be remitted back to the Assessing Officer to pass a fresh order of assessment on merits in accordance with law taking note of the facts. The impugned recovery proceedings dated 03.02.2016 and 28.03.2016 are quashed and the case is remitted back to the concerned assessing officer to pass a fresh order of assessment on merits in accordance with law taking note of all the facts. The concerned Assessing Officer is therefore requested to pass a fresh assessment order for the Assessment Year 2010-11 in the case of the petitioner within a period of three months from the date of receipt a copy of this order.
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2020 (2) TMI 733
Reopening of assessment u/s 147 - claim of the petitioner for Long-Term Capital Gains allowed under Section 54 - HELD THAT:- While passing orders under Section 147 an AO is required to keep in mind the settled principles of law on the subject. If there is a change of opinion which prompted the issue of the notice under Section 148 the officer while passing order u/s 147 can not proceed further. Proviso to Section 147 makes it clear that no action shall be taken under it, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. While conducting proceedings, an Assessing Officer is bound by the proviso to Section 147 of the Income Tax Act, 1961. While exercising the powers vested with an officer at the time of re-assessment under Section 147 of the Income Tax Act, 1961 pursuant to issue notice under Section 148 of the Income Tax Act, 1961, the officer concerned has to not only keep in mind the express language of the proviso to Section 147 of the Income Tax Act, 1961 but also well settled principles of law. The respondent cannot have a re-look into the issue arising out of the claim of the petitioner for Long-Term Capital Gains which was allowed in the assessment order passed on 29.10.2011 as there was true and full disclosure of all material required for assessment by the petitioner for claiming deduction; Therefore, the proposal to re-determine the taxable income and the tax payable by the petitioner for the reasons stated in the impugned communication is unsustainable.; At the same time, while passing final order under Section 147 of the Income Tax Act, 1961, the respondent can examine any other aspect for escaped assessment of tax in the light of Explanation 3 to Section 147 of the Income Tax Act, 1961. While passing such order, the respondent shall not disturb the deduction allowed under Section 54 of the Income Tax Act, 1961 in the assessment order dated 29.10.2011. Since the dispute pertains to the assessment year 2009-10, the respondent is hereby directed to pass appropriate order within a period of thirty days from date of receipt of a copy of this order without disturbing the claim of the petitioner for Long-Term Capital Gains allowed under Section 54 of the Income Tax Act, 1961.
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2020 (2) TMI 732
Disallowance u/s 14-A - investments in group companies - Whether it is not the object for which the investment was made, but the quality of income, tax-exempt or otherwise, that arises from the investment, needs to be considered for the purpose of section 14A of the Income Tax Act, 1961? - HELD THAT:- Appellant submits that the above two questions have been decided by the Supreme Court against the revenue and in favour of the assessee in CIT v/s. Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] . That apart, on identical issue Delhi High Court upheld the order passed by Tribunal that in the absence of any exempt income, disallowance under Section 14-A of the Act was not permissible. A Special Leave Petition filed by the revenue against the said decision has been dismissed by the Supreme Court in Principal Commissioner of Income-Tax v/s. Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER] - Decided against revenue.
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2020 (2) TMI 731
Penalty u/s 271(1)(c) - money receipts offered for taxation after being detected by the department as a result of survey action u/s.133A - Tribunal deleted the addition - HELD THAT:- Tribunal proceeded on the principle of law that when the assessee disclosed the amount during the survey action u/s 133A and the same is honoured by filing the return of income, there cannot be any order of penalty u/s 271(1)(c) of the Act, 1961. The Tribunal took support of the decision of the Delhi High Court in the case of SAS Pharmaceuticals [ 2011 (4) TMI 888 - DELHI HIGH COURT ] Having heard the learned counsel appearing for the Revenue and having gone through the materials on record, we are of the view that no error, not to speak of any error of law could be said to have been committed by the Tribunal in passing the impugned order. The question proposed by the Revenue, in our opinion, cannot be termed as a substantial question of law involved in this appeal.
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2020 (2) TMI 730
Revision u/s 263 - Respondent sought for rectification of the assessment order by setting-off the brought forward business loss and unabsorbed depreciation against the assessed income - whether claim of the assessee made for rectification has been justifiably allowed by the assessing officer? - Tribunal setting aside the order of the CIT passed under Section 263 - HELD THAT:- VIRMANI INDUSTRIES PVT. LIMITED [ 1995 (10) TMI 1 - SUPREME COURT] held that the expression profits or gains chargeable could not be confined to profits and gains from the business whose income was being computed under Section 10 of the Act. Proceeding further, Supreme Court held that effect must be given to depreciation allowance first against the profits or gains of the particular business whose income was being computed under Section 10 and if the profits of that business are not sufficient to absorb the depreciation allowance, the allowance to the extent to which it was not absorbed would be set-off against the profits of any other business and if a part of the depreciation allowance still remained unabsorbed, it would be liable to be set-off against the profits or gains chargeable under any other head and it is only if some part of the depreciation allowance still remained unabsorbed then only it can be carried forward to the next assessment year. Supreme Court explained that carried forward depreciation allowance is deemed to be part of and stands on exactly the same footing as the current depreciation for the assessment year under consideration and thus allowable as a deduction. Following the decision of the Supreme Court in Virmani Industries Pvt. Ltd. (supra), Tribunal took the view that this issue was conclusively decided and therefore, not allowing setting off the carried forward depreciation with the income of the assessment year under consideration was a mistake made by the assessing officer which was apparent from the record. When this mistake was pointed out to the assessing officer, he had rightly rectified the same under Section 154. In so far contention of Mr. Pinto that carried forward depreciation cannot be set-off against deemed income is concerned, we are of the view that such a situation does not arise in the present case. On a thorough consideration of the matter, we are in agreement with the view expressed by the Tribunal and find no error or infirmity therein. No substantial question of law.
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2020 (2) TMI 729
Waiver of interest u/s 234B - failure to pay advance tax by wrongly claiming business loss/depreciation loss - contention of the petitioner that the levy of interest on the petitioner u/s 234 B is purely on account of recasting of the taxable income for the assessment years 1988-89 and 1989-90 and not because of any fresh income being assessed to tax which the petitioner had failed to return - HELD THAT:- In the present case, it is not as if amounts were not paid under the JV agreement or amounts due were written off by the petitioner. The petitioner however claimed higher business loss and the depreciation loss during the assessment years 1988-89 to 1990-91 as the amount was not paid by the developer in time as per the JV agreement dated 30.8.1986. However, the JV agreement dated 30.8.1986 was not frustrated as was projected. The project was delayed and during the course of time there were further payments made by the developer to the petitioner and therefore there was accrual of income in the books of account of the petitioner and therefore the petitioner was liable to that extent. The assessments for the assessment years 1988-89 to 1990-91 were reopened/rectified as the petitioner had wrongly claimed business loss and depreciation loss. The re-assessments were completed for the assessment years 1991-92 and 1992-93 on 22.11.1996 and on 22.3.1999 which resulted in the increase of the positive income of the petitioner. The petitioner had however failed to pay advance tax by wrongly claiming business loss/depreciation loss during the assessment years 1988-89 to 1990-91. Therefore it cannot be stated that the petitioner was entitled to the benefit of the above notification issued under section 119 (2) (a) of the Income Tax Act, 1961. None of the situation contemplated under the attracted the CBDT Notification dated 23.05.1996 As a passing reference it may also be relevant to refer to the decision cited by the learned counsel for the respondent in Chief Commissioner of Income Tax Versus Ranjinikant and Sons [ 2017 (6) TMI 922 - MADRAS HIGH COURT] . A division bench of this court held that since the tax was paid only after the revenue had passed the reassessment order, waiver from payment of interest cannot be allowed . This is similar to the present case. We do not find any reasons to interfere with the impugned order passed by the 1st respondent while rejecting the application filed with the petitioner for waiver of interest u/s 234 B of the Income Tax Act, 1961 in terms of Notification No.400/234/95-IT (B) dated 23.5.1996. Therefore, these writ petitions are hereby dismissed
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2020 (2) TMI 728
TP Adjustment - determination of the royalty payment at Rs.nil by using the benefit test by assessee- HELD THAT:- Tribunal gave a finding that the respondent-assessee has used the technologies supplied by its A.E. in its manufacturing process and for such use of technology, it has paid the royalty. It then referred to decisions of M/S. TOYOTA KIRLOSKAR AUTO PARTS PVT. LTD. VERSUS ASST. COMMISSIONER OF INCOME-TAX, LTU, BANGALORE. [ 2015 (1) TMI 921 - ITAT BANGALORE] . In a similar case, the Tribunal had remitted the issue to the file of the A.O. to determinate the arm s length price of royalty by adopting TNMM after giving fair opportunity for hearing. Thus, the Tribunal has only remitted the matter back to the file of AO/TPO and did not adjudicate anything in the appeal and it allowed the appeal only for statistical purpose. We are not inclined to admit this appeal since after the remand order passed by the Tribunal, the matter will again be gone into as per its directions and fresh assessment would be made after complying the principles of natural justice.
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2020 (2) TMI 727
Recovery proceedings - Validity of notice u/s 226(3) - notice was issued to the banker of the petitioner on account of recovery of the amount due and payable from the petitioner for the assessment year 2017-2018 - HELD THAT:- A prima facie case has been made out by the petitioner with regard to the error apparent on the face of record and perversity in the proceeding. Hence this writ petition is entertained, for the limited purpose for consideration of the validity of the notice under Section 226(3) of the Income Tax Act, 1961. It also appears that the petitioner has preferred an appeal against the assessment order as also the demand notice. The petitioner is directed to pursue the appeal filed before the Assistant Commissioner of the Income Tax Circle 2(1), Jalpaiguri by depositing 20% of the assessed amount. Such appeal will be disposed of within a period of one month from the date of deposit of the amount as herein before stated. Till the appeal is disposed of, the demand notice as also the notices issued under Section 226(3) of the Income Tax Act to the Banks are stayed and the same will be subject to the result of the appeal. The observations made herein are only with regard to the notice issued to the Bank and for disposal of the writ petition. The appellate authority shall not be prejudiced with the observations made hereinbefore and should proceed with the appeal on its own merit and on the available documents, in accordance with law.
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2020 (2) TMI 726
Exemption u/s 11 - grant the registration u/s 12A - Charitable activity u/s 2(15) - payment of the rent of the premises to related parties is not on pro rata basis though the premises are adjoining and the rent was being paid only to the office bearers of the Society - whether the society exists for the purpose of profit of the office bearers not for charitable purpose thus attracts proviso to section 13 (1) (c) ? - Tribunal concluded that the issue regarding payment of rent to the members could be examined at the time of the assessment proceedings - HELD THAT:- We find that the learned Tribunal has rightly come to the conclusion that the genuineness of the objects of the assessee Society could not be doubted and has rightly directed the CIT, Bhopal to grant registration to the Society. Appellant failed to point out any illegality or perversity in the findings arrived at by the learned Tribunal warranting interference by this Court in exercise of power under Section 260-A of the Act. No substantial question of law arises
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2020 (2) TMI 725
Notice u/s 143(2) - period of limitation - defective return filed u/s 139(1) - petitioner having filed the correct return in response to the notice under section 139(9) - HELD THAT:- Notice u/s 143(2) is a statutory notice, upon issuance of which, the Assessing Officer assumes jurisdiction to frame the scrutiny assessment under sub-section (3) of section 143. Consequently, if such notice is not issued within the period specified in sub-section (2) of section 143 viz. before the expiry of six months from the end of the financial year in which the return is furnished, it is not permissible for the Assessing Officer to proceed further with the assessment. In the facts of the present case, as discussed earlier, the petitioner filed its return of income under sub-section (1) of section 139 of the Act on 10.09.2016. Since the return was defective, the petitioner was called upon to remove such defects, which came to be removed on 07.07.2017, that is, within the time allowed by the Assessing Officer. Therefore, upon such defects being removed, the return would relate back to the date of filing of the original return, that is, 10.09.2016 and consequently, the limitation for issuance of notice under sub-section (2) of section 143 of the Act would be 30.09.2017, viz. six months from the end of the financial year in which the return under sub-section (1) of section 139 came to be filed. In the present case, it is an admitted position that the impugned notice under sub-section (2) of section 143 of the Act has been issued on 09.08.2017, which is much beyond the period of limitation for issuance of such notice as envisaged under that sub-section. The impugned notice, therefore, is clearly barred by limitation and cannot be sustained. - Decided in favour of assessee.
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2020 (2) TMI 724
TP Adjustment - comparable selection - HELD THAT:- Assessee is engaged as captive software development support service provider to eGain, USA. The work done by the assessee belongs to the parent company. The assessee is remunerated at cost plus 10% markup. The only activity carried out by the assessee is that of rendering product software development services to its Associated Enterprise (AE), thus companies functionally dissimilar need to be deselected.
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2020 (2) TMI 723
Rectification of mistake u/s 254 - Lease equalization reserve disallowed on the reasoning that it is not a prescribed expenditure u/s 30 to 37 - HELD THAT:- As evident from the order, the Hon ble bench has merely followed the consistent view taken by the Tribunal in earlier years and restored the matter back for fresh adjudication to the file of Ld.AO on identical lines. It is quite discernible that the order of Ld. first appellate authority, on the issue, has been set aside and Ld. AO has been directed to decide the issue afresh in accordance with directions issued by Tribunal in AYs 1994-95 to 1997-98. It is also observed that the binding decision of Hon ble Delhi High Court in Virtual Soft Systems Ltd. [ 2012 (2) TMI 120 - DELHI HIGH COURT] and Prakash Leasing Ltd. [ 2012 (7) TMI 755 - KARNATAKA HIGH COURT] was much available at the time of aforesaid adjudication by Tribunal [ 2014 (12) TMI 881 - ITAT MUMBAI] and Hon ble Supreme Court has approved the same [ 2018 (4) TMI 1472 - SUPREME COURT] subsequent to adjudication by Tribunal. The bench while passing order for AY 1999-2000, in his wisdom, thought fit to follow the consistent view taken by the Tribunal in earlier years and restored the matter back to the file of Ld. AO for fresh adjudication with a view to enable the revenue to take consistent stand in the matter. Therefore, the plea as urged by the assessee in the application, in this regard, could not be accepted. Hence, finding no mistake apparent from record as envisaged by the provisions of Sec. 254(2), we decline to interfere in the order, on this point. Claim of depreciation made on leased assets - It is quite evident that the claim made by the assessee has been accepted and the depreciation of leased assets have been allowed since the lease transactions have been accepted to be genuine by the Tribunal in earlier years. We find that no elaborate finding has been rendered by the bench on the factual aspect whether the transactions were in the nature of finance lease or operating lease. The main issue was whether the transactions were genuine in nature on non-genuine in nature. Upon perusal of CIT(A) order for this year, as placed on record, would also show that no such factual findings were rendered by learned first appellate authority in its order. The depreciation was allowed by following earlier years orders and by observing that the appellant were the owners of leased assets and they have been used for the business purpose also. Therefore, the point urged by the assessee could not be accepted since there is no mistake apparent from record in terms of Sec. 254(2) which would warrant interference in the order. The application merely seeks further factual finding in the matter and seek mere improvement in the order, which is impermissible. Resultantly, we dismiss the application. Amount of lease equalization while computing Book Profits u/s 115JB - HELD THAT:- As assessee submit that the revenue challenged the decision of Ld. CIT(A) in deleting the amount of lease equalization while computing Book Profits u/s 115JB. The said matter has also been restored back by the Tribunal to the file of Ld. AO for fresh adjudication in view of the fact that similar issue, in assessee s appeal, was restored back to the file of Ld. AO. The assessee has raised similar arguments and submitted that since the issue is now covered in assessee s favor by the decision of Hon ble Supreme Court, the directions given in the order may be set-aside and the ground raised by the department may be dismissed. However, the plea urged by the assessee would stand dismissed since we have dismissed similar plea in above and declined to interfere in the order of the Tribunal.
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2020 (2) TMI 722
Deemed unaccounted scrap sale - only evidence that has been found in the course of survey by the survey team was excess cash found - AO made addition towards unaccounted scrap sale by estimating the sale of scrap at 0.162% on total sales and after deducting the scrap sales declared by the assessee in the return of income, he made addition for the difference towards unaccounted scrap sales for various assessment years - whether the ld. CIT(A) was justified in reducing the said addition for each of the assessment years under consideration? - HELD THAT:- We find that the statement given by the cashier subsequently confirmed by the Director had been later retracted on 01/10/2015 by the Director by filing an affidavit which are enclosed. But we find that the Director in his original statement had given a complete modus operandi of generation of unaccounted income and its utilization in his various businesses. Hence, the source as well as the application of unaccounted income had been discussed in detail in the statement recorded from the Director. We find that the only evidence that has been found in the course of survey by the survey team was excess cash found in the sum of ₹ 7,51,327/- based on the cash books in the months of July, August and September 2015 which admittedly pertains to A.Y.2016-17. CIT(A) had considered ₹ 7.5 Lakhs as the scrap sale of three months and had extrapolated the same for the whole year and arrived on the total scrap sale of ₹ 30 lakhs for A.Y.2015-16, when the actual data pertains to A.Y.2016-17. Hence, the whole basis of placing reliance on a document which does not pertain to the year under consideration itself makes the addition on a weaker footing. We find based on the estimation of scrap sale made for A.Y.2015-16 in the sum of ₹ 30 lakhs, the ld. CIT(A) had back worked and arrived on the estimated scrap sale for ₹ 28 lakhs for A.Y.2013-14; ₹ 24 lakhs for A.Y.2012-13; ₹ 20 lakhs for A.Y.2011-12 and ₹ 14 lakhs for A.Y.2010-11. For none of these estimations, there was any basis furnished by the ld. CIT(A). However, considering the totality of facts and circumstances of the case and the survey conducted in the premises of the assessee, we hold that the assessee would be entitled for relief of 50% of the total additions made by the ld. CIT(A) ultimately and in our considered opinion, this would meet the ends of the justice. The ld. AO is directed accordingly. Cash found during search and survey - HELD THAT:- Tabulation furnished by the assessee has not been controverted by the revenue before us. Hence, the entire cash found at the time of search and survey has been properly explained by the assessee with reference to the entries in the books of accounts. Considering this valid explanation given by the assessee, we find that the ld. AO had not made any addition towards cash found at the time of search and survey. Grounds raised by the assessee are partly allowed.
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2020 (2) TMI 721
Revision u/s 254 - Penalty u/s 271(1)(c) - defective notice or not? - HELD THAT:- Issue of penalty has elaborately been considered by the Hon ble Bench and penalty levied on income declared in the return of income as well as penalty levied on additions made by AO over and above the returned income has separately been considered by the Hon ble bench. Therefore, in our considered opinion, there is no mistake apparent from record as envisaged by the provisions of Section 254(2) and what the revenue is seeking is nothing more than a review of the order which is impermissible. The said conclusion find support from the order of Hon ble Bombay High Court in CIT V/s Earnest Exports Ltd. [ 2010 (2) TMI 261 - BOMBAY HIGH COURT] wherein it was observed that power u/s 254(2) is confined to rectification of mistake apparent on record and Section 254(2) is not a carte blanche for the Tribunal to change its own view by substituting a view which it believes should have been taken in the first instance. Further Sec. 254(2) is not a mandate to unsettle decisions taken after due reflection. These provisions empower the Tribunal to correct the mistakes, errors and omissions apparent on the face and the said provision is not an avenue to revive a proceeding by recourse to a distinguished argument nor does it contemplate a fresh look at a decision recorded on merits. A mistake apparent from record is one for which no elaborate argument is required. It must be glaring, obvious or selfevidenced mistake. If it is a mistake which requires to be establish by complicated process of investigation, argument or proof, it cannot be held to be mistake apparent from record. A debatable issue does not come with the scope of provisions of Sec. 254(2). Respectfully following the ratio of these decisions, we are of the considered opinion that the pleas urged by the revenue are beyond the scope of Sec. 254(2) and therefore, we are not inclined to accept the same. Resultantly, the application stand rejected. The plea urged in all the other applications are, more or less, similar.
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2020 (2) TMI 720
Nature of income - characterization of income - interest subsidy received - revenue or capital receipt - HELD THAT:- Technology levels were benchmarked in terms of specified machinery for each sector of the Textile Industry. It is thus clear that even though the subsidy in question under TUF Scheme was given in the form of reimbursement of the interest, the objective of giving the said subsidy was to upgrade its technology level by the eligible unit by induction of state-of-the-art or near-state-of-the-art technology and such technology level was benchmarked in terms of specified machinery for each sector of the Textile Industry. The purpose of giving incentive in the form of interest subsidy under the TUF Scheme thus was to encourage capital investment by the eligible unit in the form of specified machinery in order to induct state-of-the-art or near-state-of the-art technology or at least a significant step up from the present technology level to a substantially higher one. In our opinion, going by this purpose of the interest subsidy as specified under the TUF Scheme, the amount of interest subsidy in question received by the assessee was a receipt of capital in nature. Utilization of the amount of incentive in question for the purpose of meeting the interest liability of the Company on loans and advances taken by it to set up its plant and machinery - HELD THAT:- Hon ble Calcutta High Court has directed us to examine or investigate before arriving at any conclusion as regards the nature of the interest subsidy whether capital or revenue, it is observed that neither the Assessing Officer nor the ld. CIT(Appeals) has given any finding on this aspect. In this regard, the ld. D.R. has submitted that this matter requires verification and an opportunity may be given to the Assessing Officer to verify the same from the relevant record. We are inclined to accept this contention of the ld. D.R. and since assessee has also not raised any objection in this regard, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying the issue of utilisation of amount of subsidy in question by the assessee. If it is found by the Assessing Officer on such verification that the subsidy amount in question was utilized by the assessee for the purpose of meeting the interest liability on loans and advances taken by it to set up its plant and machinery, the subsidy incentive could be considered as a capital receipt not chargeable to tax. Otherwise, as observed by the Hon ble Jurisdictional High Court, it has to be treated as a revenue receipt.
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2020 (2) TMI 719
Revision u/s 263 - receipts of assessee under different heads i.e., academic fees, building development fund and other development funds comes - HELD THAT:- When the amount in question is included in total receipt of the assessee and have been assessed by the A.O, as such at original assessment stage after examining the same, there is no question of holding that it is an unaccounted income of the assessee or that A.O. failed to make enquiry on the same. The A.O. has verified all the facts after issuing query letter and considered the reply of the assessee and examination of details and books of accounts. Since the total receipts have been disclosed in the income and expenditure account being the receipt on account of fees received from the students and it is disclosed in the income and expenditure account, it could not be considered as unaccounted income in the hands of the assessee. A.O. has considered the total income as per income and expenditure account as per the reply filed at original assessment stage, therefore, it could not be termed as that A.O. did not verify the fact of receipt of amount from the students and thereafter deposit in Bank Account. Why the cost of acquisition of the assets should not be disallowed and not considered as income of the assessee Trust? - Second issue is with regard to amount of two entries ₹ 1.5 crores, which assessee has explained that ₹ 1.56 crores was the amount received on sale of land through cheque, therefore, it could not be an undisclosed income of the assessee. Further, interest have been received which is also appearing in Form-26AS and disclosed to the Revenue Department as well. Therefore, figure of ₹ 2.18 crores noticed by the CIT(E) in the show cause notice under section 263 is incorrect. A.O. has considered the sale proceeds and expenditure incurred by the assessee including building fund etc., in the original assessment proceedings. CIT(E) also considered the issue of cost of acquisition, but, the A.O. in the subsequent Order in pursuance of Order under section 263 did not make any addition against the assessee on account of interest as well as cost of acquisition because the same was also considered and added in the original assessment. These facts, therefore, made it very clear that Ld. CIT(E) in the show cause notice has mentioned some incorrect facts which are not part of the record and all the issues have been examined by the A.O. and has specifically mentioned in assessment order. If Ld. CIT(E) wanted to take a different view, then he should have made a detailed enquiry at revision stage and should have come to the finding as to how the assessment order was erroneous and prejudicial to the interests of Revenue. The Ld. CIT(E) merely mentioned that since these issues have not been enquired into by the A.O, therefore, Explanation-2 to Section 263 of Income Tax Act, 1961, would apply against the assessee. Further, assessee has explained all the issues at original assessment stage as well as before Ld. CIT(E) in proceeding under section 263 of the Income Tax Act, 1961. Therefore, it is not fit case of invocation of jurisdiction under section 263 - Decided in favour of assessee.
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2020 (2) TMI 718
Validity of the assessment order u/s 153A for want of approval under section 153D - assessment under section 153A could be passed by the A.O. below the Rank of JCIT - HELD THAT:- No order of assessment under section 153A could be passed by the A.O. below the Rank of JCIT except with the prior approval of the Joint Commissioner. In the present case, the assessment order have been passed by the DCIT, CC, Ghaziabad. Thus, the A.O. is below the Rank of JCIT, therefore, before passing the order under section 153A under appeal, the A.O. shall have to obtain prior approval of the JCIT. It is the condition precedent before passing the assessment order under section 153A. Assessee filed copy of the order sheet of the A.O. which does not mention if A.O. has sent any proposal to the JCIT/Addl. CIT for obtaining prior approval before passing the impugned assessment order. Assessee filed several letters obtained under RTI and others which clearly prove that the approval u/s 153D is not available to the A.O. or the Officer who has provided information under RTI Act. Even no such approval was found in the assessment record. The ITO, Ward-1(5), Ghaziabad, also intimated the Ld. CIT-D.R. that such approval of Addl. CIT Dated 28.03.2019 under section 153D could not be traced-out from the record of the assessee available presently with this Office and assessee has also intimated the same fact under RTI Act. CIT-D.R. during the course of arguments has also admitted that approval under section 153D of the I.T. Act Dated 28.03.2013 is not available for inspection of the Bench. These facts, clearly prove that no prior approval under section 153D by JCIT/Addl. CIT before passing the impugned assessment order have been obtained. A.O. was not competent to pass the assessment order under section 153A . The assumption of jurisdiction of the DCIT, CC, Ghaziabad to pass the impugned appellate order is thus vitiated. The entire assessment order under section 153A is null and void and is liable to be quashed. In view of the above discussion, we set aside and quash the entire impugned appellate orders. Resultantly, all the additions stand deleted. Additional ground of appeal of assessee is allowed.
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2020 (2) TMI 717
TP Adjustment - Non follow procedure u/s.144C - Non referring to TPO - only draft assessment order passed - limitation for passing the assessment order - HELD THAT:- It is an undisputed fact that limitation for passing the assessment order, if it was not draft assessment order was 31.03.2014. However, as noted above, the Assessing Officer has passed the draft assessment order and has forwarded the same to the assessee stating that if the assessee does not agree with the transfer pricing adjustment, then he can file objection before the DRP within 30 days of the said order. It is only when assessee intimates to the Assessing Officer that he has accepted the variation order he has no objection within 30 days then Assessing Officer has to complete the assessment order on the basis of draft assessment order. Here in this case, there was international transaction and deviation arises out of transfer pricing adjustments though without referring to TPO in terms of Section 92CA, the Assessing Officer was obliged to follow the procedure u/s.144C, which he has not. Draft assessment order dated 31.03.2014 cannot be treated as final assessment order simply by way of issuing corrigendum on 05.05.2014 and since no final assessment order has been passed as on 31.03.2014 and only draft assessment order has been passed, therefore, the said draft order has no consequence and is null and void. Accordingly, on this ground, appeal of the assessee is allowed
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2020 (2) TMI 716
Interest received u/s 28 of the Land Acquisition Act - Income from other sources - HELD THAT:- We find that the CIT(A) has elaborately discussed the issue of interest received u/s 28 of the Land Acquisition Act to be brought to tax in terms of section 56(2)(viii) of the Income-tax Act, 1961, in paras 8 to 12. The CIT(A) relying on the judgment of Hon ble Supreme Court in the case of Bikram Singh Vs. Land Acquisition Collector [ 1996 (9) TMI 6 - SUPREME COURT] has upheld the order of AO. Considering the settled nature of the issue, we are of the opinion that the CIT(A) has rightly dismissed the appeal of assessee and does not call for interference from our side. Accordingly, the grounds raised by assessee are dismissed.
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2020 (2) TMI 715
Reopening of assessment u/s 147 - default approval granted by the Addl. CIT - approval u/s. 151 of the Act before issuing the notice u/s. 148 - HELD THAT:- Reopening in the case of the assessee for the asstt. Year in dispute is bad in law and therefore the same is quashed. Aforesaid view is fortified by the following decisions including in the case of Dharmender Kumar vs. ITO 2019 (10) TMI 736 - ITAT DELHI] as held CIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval Aapproval granted by the Addl. CIT, Range-45, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 of the I.T. Act, 1961 and is not in accordance with section 151 of the I.T. Act, 1961, thus, the notice issued u/s. 148 of the Act is invalid and accordingly the reopening in this case is bad in law and therefore, the same is hereby quashed. Accordingly, this legal ground raised by the assessee s is allowed.
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2020 (2) TMI 714
Disallowance selling expenses incurred in respect of sale of land - payment was made in cash in violation of the provision of sec. 269SS and 269ST - payment was made to avoid any legal dispute - period for filing the suit for specific performance under Specific Relief Act, 1963 - case of the assessee before us that the amount of ₹ 36.00 lakhs was paid to Kisan S. Kharat on account of settlement entered between the assessee and Kisan S. Kharat with a view to improve the title of the assessee - HELD THAT:- In accordance with the law, the period for filing the suit for specific performance under Specific Relief Act, 1963 is provided for three years from the date of agreement. In the present case, the agreement was entered into between Aruna G. Jadhav and Bhausaheb R. Katore and Kisan S. Kharat on 16-3-2009 and therefore, the period of limitation ends on 16-3-2012. Meaning thereby a suit for specific performance and declaration filled by Shri Kisan S. was maintainable upto 16-3-2012, as per Article 54 of the Limitation Act 1961. If we look into the amendment made in the suit, there is no reference of encumbrances on the property purchased by the assessee and there is no claim for recovery of damages etc. for ₹ 36,00,000/- - the compromise document dated 3-12-2012, it is clear that the suit filed by shri Kisan S. Kharat was unconditionally withdrawn and therefore, there was no occasion of making the payment of ₹ 36.00 lakhs to Kisan S. Kharat made by the assessee. From contents of compromise document, it is crystal clear that the suit was withdrawn by Kisan S. Kharat unconditionally and there was no reference of making of the payment by the assessee Shri Hirabai Katore. Besides Hirabai Katore there are other co-defendants in the suit and it is not clear which of the defendants have entered into the compromise with the plaintiff. Moreover, in the sale document, there is clear stipulation that the property is free from any kind of encumbrances. There is one more reason to dis-agree with the contention of the learned A.R. that the amount of ₹ 36.00 Lakhs were paid pursuant to the agreement vide receipt dated 4-12-2012. On cursory glance of the document, it is clear that stamp paper on which the affidavit was made, was purchased by Bhausaheb R. Katore and details of alleged payment of ₹ 36 Lakhs in installment given to Kisan S. Kharat, as on 16-6-2012, 3-12-2012 and 4-12-2012 for an amount of ₹ 12.50 lakhs, ₹ 12.50 lakhs and ₹ 11.00 lakhs respectively. The Bench is unable to accept that the payment of ₹ 12.50 lakhs was given on 16.06.2012 by the assessee in cash even prior to institution of the suit by Kisan S. Kharat and admittedly the suit was filed on 8-12-2012 only i.e much after making the payment and purchase of property by the assessee. The evidence relied upon before us by the assessee in the form of affidavit at page 48 cannot be considered and is required to be rejected being self serving document and contrary to normal circumstances. We are of the opinion that the amount of ₹ 36.00 lakhs was allegedly paid in cash and the assessee has not been able to disclose the source for making the alleged payment to Shri Kisan S. Kharat. Even otherwise, if a person makes the payment in cash beyond the stipulated amount as provided by the Act then there is a violation of the said provision of sec. 269SS of the Act. If Shri Kisan S. Kharat admitted to have received the amount in cash from the assessee then he is liable for violation of provision u/s 269ST of the Act. In respect of other payment allegedly paid by the assessee to Bharat B. Choudhari for an amount of ₹ 25.00 lakhs, we are of the opinion that firstly, Shri Bharat B. Choudhari had sold the property along with Katore viz. Hirabai B. Katore on 13-7-2012 for a total consideration of ₹ 50.00 lakhs. Secondly, being the owner of the property, the entire sale consideration falling to his share had already been received and admitted by Shri Bharat B. Choudhari in the sale document executed on 30.07.2012. Therefore, there was no reason or logic for paying unauthorized amount of ₹ 25.00 lakhs on the date hereinabove mentioned by the assessee in cash. In our view, the payment was made in cash in violation of the provision of sec. 269SS and 269ST. There was no improvement in the title of the assessee or the improvement in the property as no evidence was led before us showing that Shri Bharat B. Chowdhury had contributed substantially either before the Collector or before the Civil Court. Further, we may record that the Collector had issued the certificate on 14/12/2011 i.e. much prior to the purchase of property by the assessee on 30.07.2012, hence, there was necessity to make the payment to this person as well. In view of the above, the findings recorded by the lower authorities are in order and no interference is called for. Appeal of the assessee is dismissed.
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2020 (2) TMI 713
Disallowances of bad debt - Whether the assessee is carrying on business of real estate activities ? - HELD THAT:- We hold that the assessee was carrying out the business activities in the year under consideration. Accordingly, we are not impressed with the finding of the learned CIT (A) for the reasons as discussed above on the issue that the assessee was not carrying out any business activity of the real estate. Whether the assessee is entitled for the deduction of the bad debts in a situation where the 3rd party acknowledges to make the payment to him? - we note that the assessee is entitled for the bad debts once he has written off the same in the books of accounts. As such, the assessee is not required to justify the irrecoverability of the amount from the debtors. In holding so we find support and guidance from the judgment of Hon ble Supreme Court in the case of T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] Admittedly, the party to whom the assessee has sold its properties namely Shukan Corporation Pvt Ltd has become insolvent and accordingly the assessee was of the view that the amount due from it was not recoverable. Undisputedly, the party namely M/s Shree Hari Enterprises has agreed to make the payment to the assessee as evident from the order of the Debt Recovery Tribunal dated 29.03.2016. This order of the tribunal was passed on 29th of March 2016 whereas the case before us pertains to the assessment year 2014-15 and this fact was not in the knowledge of the assessee at the relevant point of time. As such it was not possible for the assessee to foresee in future for the recovery of the amount by the order of the Debt Recovery Tribunal. As such, the assessee cannot be blamed for claiming the bad debts in the year under consideration. We hold that the assessee was entitled for the bad debts claimed by him in the year under consideration. - Decided in favour of assessee Disallowances on account of land levelling expenses - absence of sufficient documentary evidence, that such expenditure were not incurred by the assessee for its alleged business activities - HELD THAT:- We note that the assessee in support of the expenses incurred toward the land levelling/ Mati puran have furnished the copies of the bills - k. However, none of the authorities has exercised his power granted under the statute to verify the genuineness of the expenses claimed by the assessee by issuing notices under section 131/133(6) of the Act. In our view, the authorities below were under the obligation before rejecting the claim of the assessee to verify the veracity of the bills produced by the assessee. Inspector of the income tax has visited to the site of the assessee and furnished to report that there was no brick bhatta thereon whereas the assessee claimed that the Brick Bhatt was set up the after taking the approval from the Revenue Authorities. Report from the inspector is not supported on the basis of any corroborative evidence. As such the revenue was under the obligation to collect the requisite report from the revenue authorities to find out whether there was any brick Bhatta as discussed above. Thus in the absence of any corroborative evidence, we are not impressed with the report of the inspector of the income tax. We also note that there are certain bills furnished by the assessee pertaining to the prior period, therefore the same, amounting to 9,14,600/-, cannot be allowed as deduction as the assessee has already claimed expenses of ₹ 46,74,000/- under the head Mati Puran in immediate previous year. There was an expenditure incurred by the assessee after the transfer of the property to M/s Shukun Corporation dated 18th April 2013. In our considered view once the property has been transferred, then there was no reason for the assessee to incur any expenditure thereon. As such the assessee before us has not justified, based on any documentary evidence, that he was under the obligation to incur the expense after the date of the transfer of the property. Accordingly, the bills raised upon the assessee after the date of 18th April 2013 are not eligible for deduction. The total of these bill comes to ₹ 15,69,400/-. The same is disallowed. Hence the ground of appeal of the assessee is partly allowed.
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2020 (2) TMI 712
Penalty u/s. 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee Non recording satisfaction before initiating penalty proceedings - HELD THAT:- Penalty imposed in the present cases has to be cancelled for the reason that the AO has not recorded proper satisfaction in the order of assessment for initiating penalty u/s. 271(1)(c) of the Act. In the decisions cited by the ld. counsel for the assessee on identical facts as in the case of assessee in the present appeals, CHANDRASEKARAN [ 2015 (4) TMI 679 - KARNATAKA HIGH COURT] took the view that there has been no recording of satisfaction for initiating penalty u/s. 271(1)(c) and on that ground the penalty imposed was cancelled. - Decided in favour of assessee
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2020 (2) TMI 711
Revision u/s 263 - TDS u/s 195 - income admitted by the NRI - non- deduction of tds - o rder u/sec. 201(1) 201(1A) - HELD THAT:- Assessee has filed the details before the Assessing Officer by stating that NRI has offered the entire income for taxation by filing return of income before the Assessing Officer (International Taxation), Nellore and therefore treating the assessee is in default is not correct and requested to rectify the order. By considering the explanation of the assessee, the Assessing Officer is of the opinion that NRI has already filed his return of income by offering the income for taxation, therefore he rectified his order on 14/06/2018. We find that ld.Commissioner is not able to establish what the prejudice is caused to the Revenue in the rectification order passed by the Assessing Officer. To invoke section 263, both the conditions have to be fulfilled i.e. order passed by the Assessing Officer not only erroneous but also prejudicial to the interest of the Revenue. In the present case, ld.Commissioner not able to establish that the order passed by the Assessing Officer is prejudicial to the interest of the Revenue, therefore it is not a fit case to invoke section 263. Accordingly, the order passed by the ld.Commissioner is reversed and restore the order of the Assessing Officer. - Decided in favour of assessee
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2020 (2) TMI 710
Capital gain computation - valuation made as per section 50C - Asset demolished by the purchaser - AO by applying provisions of section 50C adopted the fair market value of the property - HELD THAT:- Though the assessee has the physical possession of the property, but as per Revenue records the ownership of land rests with the Government of Maharashtra. It is also a fact that during the year under consideration the assessee had sold the land along with shed thereon to M/s. Millenium Marbles Pvt. Ltd., who was already in possession of the land - structure that was sold by the assessee was demolished by the purchaser and the structure was stated to have been in existence since the time of its purchase by the assessee. Assessee had got valuation report prepared by the registered valuer who had valued the shed at ₹ 2.10 lakhs as against the value adopted by the DVO at ₹ 69,64,713/-. When the shed that was an old structure and was demolished by the purchaser, we are of the view that the DVO was not justified in valuing the shed at ₹ 69,64,713/-. At the same time, we are of the view that the value adopted by the valuer at ₹ 2.10 lakhs is also on a lower side - we are of the view that if the value adopted in the present case is restricted to ₹ 20 lakhs, would meet the ends of justice and accordingly we direct the Assessing Officer to consider the value of shed at ₹ 20 lakhs and re-work the capital gains. In view of the aforesaid, the amended ground raised by the assessee is allowed.
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2020 (2) TMI 709
Exemption u/s 11 - Assessment of trust - assessee trust eligible for standard deduction at the rate of 30% u/s 24 (a) of the act, out of the rental income chargeable to tax in the hands of the assessee - HELD THAT:- The assessee has earned rental income of ₹ 978600/ and claimed deduction at the rate of 30% amounting to ₹ 293580/ . Assessee is a charitable trust and the computation of income is governed in the case of the assessee by the provisions of section 11, 12 and 13 of the income tax act. These provisions though provide for various types of income on by a charitable trust however, it has nothing to do with the matter of computation of total income as referred to in chapter IV of the act. This issue is squarely covered against the assessee by the decision of the coordinate bench in Nandlal Tolani Charitable vs ITO (E)-2(1), Mumbai [ 2019 (4) TMI 762 - ITAT MUMBAI] - No merit in this ground of appeal of the assessee. Accordingly we hold that assessee trust is not eligible for standard deduction at the rate of 30% u/s 24 (a) of the act, out of the rental income chargeable to tax in the hands of the assessee. Carry forward of excess of expenditure over income for the year - claim of the assessee is that if there is a deficit during one assessment year it should be allowed to be carried forward to the next assessment year as the deficit of the earlier years is allowable as application of income in subsequent years - AO and CIT-A denied claim - HELD THAT:- Hon ble Bombay High court has dismissed the appeal of the Revenue in DIT(E) v. Gem Jewellery Exports Promotion Council [ 2011 (9) TMI 1178 - SC ORDER] on the issue of set off of deficit of earlier years against surplus of the impugned assessment year. Further Hon ble Courts/Tribunal had taken consistent stand that in case of Charitable Trust excess expenditure over income is to be allowed to be carried forward for setting off against income of subsequent years. Thus the deficit of this year is allowable to assessee for set off in subsequent years. Therefore, we allow the carry forward of excess expenditure over income to be carried forward to subsequent years . Thus, we reverse the orders of lower authorities and allow ground no 2 of the appeal.
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2020 (2) TMI 708
Computation short term capital gain (STCG) - allocation of Portfolio Management Services (PMS Charges) towards Dividend and interest income - revenue authorities allocating Portfolio Management Services (PMS) Charges while computing income under the head short term capital gain (STCG) which suffers tax @ 15% as against the claim of assessee that the deduction on account of PMS Charges while computing income under the head STCG should be only ₹ 6,63,040 - HELD THAT:- Difference in apportionment between the Assessee and the revenue is because of inclusion of STCG earned by the Assessee on his own without the services of the PMS provider has also been included by the revenue in the income generated through the services of PMS providers. The Chart annexed to this order as Annexure-II will show that the STCG earned by the Assessee of ₹ 10,17,38,369 comprises of STCG earned by the Assessee on her own without the services of PMS provider as well as through services provided by the PMS provider. STCG earned by the Assessee through the services of the Two PMS providers is reflected in the Chart given as Annexure-II to this order . Therefore, the apportionment of PMS charges paid by the Assessee of ₹ 41,67,502/- has to be apportioned only on the basis of income earned through the respective PMS providers to the total PMS charges. This basis of apportionment as given in the chart given as Annexure-I to this order, in our view appears to be correct. This Chart was however not filed before the revenue authorities but Chart given as Annexure-II to this order was filed before the CIT(A) and there is no difference in the chart given as Annexure- I and II in principle except the manner of presentation. In our view, the CIT(A) was not justified in holding that the Assessee has not brought any documentary evidence to substantiate the basis of allocation of PMS fee to selective PMS providers. The documents in the form of statement of the PMS providers viz., HDFC Asset Management Company Ltd. and that of Morgan Stanley AMC (Empower fund) clearly show the income earned from the two PMS providers. CIT(A) accepts that allocation of expenses should have been done on the total income through earned through PMS under the head STCG and interest income. He has however overlooked that this is the basis of allocation by the Assessee. On the facts and circumstances of the present case, we are satisfied that the basis of allocation of PMS charges as done by the Assessee is correct and deserves to be accepted. We therefore direct that the allocation of PMS charges as done by the Assessee be accepted. - Decided in favour of assessee
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2020 (2) TMI 707
Capital gain computation - assessee is aggrieved with the report of the DVO - HELD THAT:- First objection relates to determination of fair market value as against DLC value and the fall in the fair market value especially due to the fact that the shops of the assessee are situated just in front of the railway bridge and due to such railway bridge, commercial value of shops has come down drastically which has been duly considered and addressed by the DVO in its report dated 30.10.2015. In his report, the DVO has stated that the shops are situated on main 100 feet wide road having all commercial amenities and regarding railway bridge, the assessee has not provided any alignment map/route map of bridge and at present, the work is stopped and as on date of sale, the bridge is not in existence. The said findings of the DVO remain uncontroverted before us and we therefore don t find any justifiable reason to interfere with the said findings of the DVO and the first objection is hereby dismissed. Regarding the other objection raised by the ld AR regarding adoption of CPWD rates as against PWD rates, we agree with ld AR that where the shops are situated in the jurisdiction of state PWD, State PWD rates should be applied for estimation of cost of construction of shops. The same is the consistent position of this Bench following the decision of Hon'ble Supreme Court in the case of CIT Vs. Sunita Mansingha [ 2017 (4) TMI 303 - SUPREME COURT] including the decision of CIT Vs. Hotel Joshi [ 2017 (4) TMI 303 - SUPREME COURT] . In absence of any contrary precedent brought to our notice, we direct the adoption of state PWD rates for determination of cost of construction of shops and to this limited extent, the matter is remanded to the file of AO/DVO to determine the value of the shops after considering state PWD rates. Thus, first ground of appeal is dismissed and the second ground of appeal is allowed for statistical purposes.
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2020 (2) TMI 706
Exemption u/s 11 - section 2(15) Applicability - Carry forward and set off of unabsorbed deficit - HELD THAT:- We notice that the learned CIT(A) has followed the decisions rendered by the Co-ordinate Benches in M/S. KARNATAKA INDUSTRIAL VERSUS THE ADDITIONAL DIRECTOR OF INCOME TAX (EXEMPTIONS) , BANGALORE. [ 2015 (10) TMI 481 - ITAT BANGALORE] deciding the first issue, i.e., the issue relating to applicability of proviso to sec.2(15) of the Act and accordingly held that the said proviso will not apply to the activities carried on by the assessee. We also notice that the Ld CIT(A) has followed SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL [ 1993 (11) TMI 17 - GUJARAT HIGH COURT] case holding that the assessee is entitled to claim set off of brought forward excess application (deficit) during the year under consideration. Accordingly, we do not find any infirmity in the order passed by the CIT(A). Appeals filed by the Revenue are dismissed.
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Customs
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2020 (2) TMI 705
Calculation and Recovery of customs duty - auction sale of warehoused goods - distribution of sale proceeds - argument of Revenue is that the distribution of sale proceeds has to be in accordance with Section 150 of the Act as there is a specific provision concerning custom duty charges which will have precedence over recovery of warehouse charges under 150(2)(e) of the Act - whether the calculation of the custom duty would be assessed as on the date of the deemed removal of goods from the warehouse in terms of Section 61 as interpreted by this Court in Kesoram or on the date of sale for the reason that the importer has failed to seek clearance of the goods imported? HELD THAT:- As per the appellants, the right to recover customs duty is superior to the right to recover warehouse charges in terms of Section 150 of the Act and that sale was conducted under Section 72 and not under Section 63 of the Act. If the contention of the Revenue is to be accepted, the custom duty will be much more than the price received in tender sale. However, if the date of calculation of custom duty is treated to be the date of sale, the demand of sum of ₹ 27,47,146/- would be untenable - The appellants have referred to a communication dated 16th April, 2004 wherein the respondent was called upon to clear the goods after the expiry of extended period failing which payment of full amount of duty will be payable together with all rent, penalties, interest and other charges. KESORAM RAYON VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [ 1996 (8) TMI 109 - SUPREME COURT] is a case where the importer claimed levy of custom duty which remained in bonded warehouse beyond the permitted period claiming that the duty as is applicable on the date the goods were sought to be removed for home consumption, will be chargeable. This Court found that the goods can be kept in a warehouse in terms of the period specified under Section 61 of the Act and, therefore, Section 68 and Section 15(1)(b) apply only when the goods were cleared from the warehouse within the permitted period or with permitted extension and not beyond the permitted period or permitted extension - The present case is not a case of levy of custom duty on the importer. The importer has not sought the release of goods within the permitted period of warehouse. Therefore, the judgment in Kesoram will not be applicable in respect of the goods to be auctioned on account of failure to seek the release of imported goods by the importer though after the permission from the proper officer. In view of the Circular issued by the Central Board of Excise Customs, the custom duty is to be calculated on the sale price and not on the duty as is payable on the date of deemed expiration of permitted period of warehouse. Such Circular of the Board is binding on the Revenue. Therefore, the custom duty has to be paid on the basis of sale proceeds realised from the sale of the goods kept in a warehouse and not on the basis of the custom duty payable at the time of filing the Bill of Entry or on the date of expiry of permitted period of warehouse. The present appeal is disposed of with directions to ascertain the customs duty keeping in mind the dispensation indicated in the enabling provisions of the Customs Act, 1962 and Chapter 21 of Central Board of Excise and Customs Manual read with circular dated 20th November, 2011 and adjust the same as per the priority specified in Section 150(2) of the stated Act - Appeal disposed off.
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2020 (2) TMI 704
Purchase from 100% EOU and export - 100% EOU are not entitled for export incentives and exemption - Vishesh Krishi Upaj Yojna - Validity of Circular dated 21st January, 2009 - challenge on the ground that it is contrary to the Foreign Trade Policy 2004-2009 - Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - HELD THAT:- Section 5 of the Act empowers the Central Government to formulate and announce by notification in the official gazette the Foreign Trade Policy and may also, in the like manner, amend that policy from time to time. The Circular dated 21st January, 2009 does not modify or amend the Scheme notified for the year 2006- 07. It only clarifies that 100% export-oriented units which are not entitled to seek exemption cannot avail benefit indirectly through the purchasers from them. It is modification or amendment of the Scheme which is required to be carried out by publication in the official gazette but not the clarifications to remove ambiguity in the existing Scheme - In terms of Clause 3.8.5 of the Scheme, the Government has reserved the right to specify from time to time the export products which shall not be eligible for calculation of entitlement. Since the Government has reserved right in public interest in terms of the Scheme notified under the Act, therefore, the Circular dated 21st January, 2009 cannot be said to be illegal in any manner. There are no merit in the argument that exports made through an Export Oriented Unit would be entitled to incentives. The purpose of the Scheme is that 100% Export Oriented Units or units situated in Special Economic Zone are not to be granted incentives. The purpose and object of the Scheme notified cannot be defeated by granting incentives to units which exports though 100% Export Oriented Units - there are no merit in the argument that the Scheme excludes the benefit of exports by units in DTA in a Scheme pertaining to FMS notified along with Yojna in April 2006 for the reason that FMS has an explicit clause whereas the DTA was not excluded from claiming exemption under clause 3.8.2.2 related to Yojna. The export-oriented units cannot use the appellant for export under the Scheme and to claim benefit of export when it is not permissible for them directly - Appeal dismissed.
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2020 (2) TMI 703
Maintainability of petition - availability of alternate remedy - Principles of Natural Justice - no personal hearing was afforded to the Petitioner, even though the same was requested before issuance of the impugned letter - HELD THAT:- The Respondents are directed to furnish a copy of the alert Circular No.2/2019 to the Petitioner, within 7 days from today. The Petitioners are granted 7 days time to file an additional response to the show cause notice issued to them and in the context of the alert Circular No.2/2019. The adjudicating authority, on remand, to dispose of the show cause notice issued to the Petitioner afresh and on its own merits, without referring to and relying upon the alert Circular No.2/2019. The adjudicating authority to afford a personal hearing to the Petitioner before disposing of the show cause notice, as aforesaid. The order now made by us and without prejudice to the rights and contentions of the Petitioner, Mr. Dada, learned Senior Advocate for the Petitioner states that the challenge to the alert Circular No.2/2019 is not being pressed for the present - petition disposed off.
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2020 (2) TMI 702
Reduction in quantum of penalty - non-speaking order - principles of natural justice - HELD THAT:- From the perusal of the order passed by the Commissioner it does appear that there were various other parameters which should have been taken into consideration while fixing the amount of penalty. Since there is an absence of considerations of all the parameters the question of law as reframed will have to be answered in favour of the Appellant. The impugned order to the extent it reduces the penalty from Rupees Ten Crores to Rupees One Lakh is quashed and set aside - appeal allowed.
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2020 (2) TMI 701
Maintainability of Settlement Commission - applicability of Section 123 of CA on cigarettes - prohibited goods or not - HELD THAT:- It appears that looking to the provisions of Section 127B especially, third proviso thereof, no application could have been made by the respondent in relation to the goods to which Section 123 of the Customs Act, 1962 applies. In the facts of the present case, show cause notice was issued to this respondent on 7th April, 2017 (Annexure P-11 to the memo of this writ petition). The goods involved in this case is cigarettes which is a notified item. The Central Government notification is dated 25th July, 2016 with Notification No.103/2016 Customs(NT). Once the goods in question are covered under Section 123, no application could have been preferred by the respondents under Section 127B of the Customs Act, 1962. The first application was preferred on 16.08.2017, the second was preferred on 11.12.2017 and the third application was preferred on 12.12.2017 which are subsequent to the aforesaid notification dated 25th July, 2016. Thus, by no stretch of imagination it can be said that the Settlement Commission had any power, jurisdiction and authority to decide an application preferred by the respondent under Chapter XIV of the Customs Act, 1962. It is well settled that an order passed by a Court cannot be so interpreted as permitting a statutory authority to act in violation of the statute. We are unable, therefore, to extend the order of the High Court of Punjab and Haryana as permitting the Settlement Commission to entertain the application, filed by the respondents before it on merits, even in the face of the expressed statutory proscription contained in the third proviso to serve Section 127B of the Customs Act. The order dated 15th February, 2018 (Annexure P-1 to the memo of this writ petition) passed by the Settlement Commission is set aside - petition disposed off.
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2020 (2) TMI 700
Revocation of CHA license - Forfeiture of security deposit - service of notice as per section 20(1) of the CBLR - time limitation - whether the SCN issued by the SIIB would constitute an 'offence report' for the purpose of Regulation 20(1) of the Regulation? - HELD THAT:- In the present case a comparison of the SCNs issued by the SIIB on the one hand and the respondent on the other makes it very clear that the latter SCN has been issued only based on the information culled by the SIIB; in fact some portions of SCN dated 27.07.2017 appear to have been bodily lifted from the earlier SCN dated 09.05.2017. Thus, clearly it is the SCN issued by the SIIB that forms the information/'offence report' on the basis of which SCN dated 27.07.2017 has been issued - This argument of the petitioner is thus rejected. Timelines stipulated in Regulation 20(5) of CBLR - HELD THAT:- The SCN based on the offence report is dated 27.07.2017; thus the enquiry report ought to have been furnished within 90 days from 27.07.2017 i.e. on or before 27.10.2017; however the enquiry report is dated 02.11.2017, beyond the period stipulated in Regulation 20(5) - Courts have consistently taken the view that the timelines set out in the CBLR are not just directory but mandatory and have to be strictly followed/ enforced. The impugned order revoking the licence is set aside - petition allowed - decided in favor of petitioner.
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Insolvency & Bankruptcy
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2020 (2) TMI 699
Admissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - HELD THAT:- In the present case, there is nothing on record to suggest that the Corporate Debtor acknowledged the debt within three years and agreed to pay the debt. The application moved by Corporate Debtor to restructure the debt or payment of the interest, does not amount to acknowledgement of debt. There is nothing on record to suggest that the Corporate Debtor or its authorized representative by its signature has accepted or acknowledged the debt within three years from the date of default or from the date when the account was declared NPA, i.e., on 31st December, 2013. The Balance Sheet of the Corporate Debtor for the year 2016-2017 filed after 31st March, 2017 cannot be termed to be a document of acknowledgement in terms of Section 18 of the Limitation Act - Any dues payable, even if acknowledged after three years of limitation period, cannot be taken into consideration for the purpose of deriving conclusion under Section 18 of the Limitation Act. Admittedly, the Corporate Debtor the defaulted in making payments on 20th September, 2013 and the Dena Bank declared the account as NPA on 31st December, 2013. Therefore, the application filed under Section 7 of the I B Code by the Bank is barred by limitation. The matter is remitted to the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench to decide the fee and cost of the Corporate Insolvency Resolution Process as incurred by the Resolution Professional, which is to be borne and paid by the Dena Bank (Financial Creditor) - appeal allowed by way of remand.
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2020 (2) TMI 698
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute - HELD THAT:- On perusal of the records it is found that having failed to get the outstanding payments from the respondent, the applicant was compelled to issue demand notice under section 8 of I B Code on dated 23.07.2019. Record also shows that the respondent has not raised any reply/dispute against the demand notice so issued by the applicant - On perusal of the record it is found that the petition is complete in all respect. This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of IB Code as enshrined in the Code. That, the respondent also filed affidavit admitting the dues and no dispute has been raised by the respondent at any point of time. That, Applicant is an Operational Creditor within the meaning of Section 5 sub-section (20) of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - petition admitted - moratorium declared.
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2020 (2) TMI 697
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational debt or not - HELD THAT:- In TATA CHEMICALS LIMITED VERSUS RAJ PROCESS EQUIPMENTS AND SYSTEMS PRIVATE LIMITED [ 2018 (11) TMI 1662 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI] this bench had held that refund of advance money is not in connection with goods or services. The service was to be rendered not by the Operational Creditor but the Corporate Debtor. In the present case also, the claim relates to non-payment of advance money and hence the same is not covered under the definition of Operational Debt . Application dismissed.
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2020 (2) TMI 696
Liquidation Order - commencement of liquidation and appointment of Liquidator - HELD THAT:- The affairs of the Company have been completely wounded-up and its assets are also liquidated as per the statement of facts furnished by the Liquidator as briefly stated. The Liquidator has filed the instant Application/Petition as per extant provisions of the Code and Rules made thereunder. Therefore, there would be no purpose to be served to keep the name of Company on rolls of Registrar of Companies, State of Karnataka. Hence, the Company Petition deserves to be allowed as prayed for. M/s. GTS Coil Private Limited, the Applicant herein, is hereby liquidated with immediate effect.
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2020 (2) TMI 695
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - debt due and payable or not - HELD THAT:- It is clear that there is ongoing pre-existing dispute between both the parties. The Hon'ble Supreme Court has held that existence of undisputed debt is sine qua non of initiating Corporate Insolvency Resolution Process (CIRP) in Transmission Corporation of Andhra Pradesh Ltd. v. Equipment Conductors Cables Ltd. [ 2018 (10) TMI 1337 - SUPREME COURT ]. Petition dismissed.
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2020 (2) TMI 694
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT:- A letter regarding strategic investor have been stated to have been written by such person on 1/10/2015 as well as on 8/6/2016 which has formed part of discussion and deliberation between the corporate debtor and financial creditor. The corporate debtor has also referred to a fact that it had paid ₹ 4.34 crore to SBI during the period from 25/8/2014 to 25/8/2015 under holding on operation permitted by SBI in terms of the letter dated 25/8/2014. This fact is born out from the letter of demand, copy of the same has been placed at pages 138 to 149 of the reply affidavit of the corporate debtor. It has also been mentioned at para (v) at page 12 of the reply that the proposal of restructuring was given in the year 2016, which was rejected by the bank, copy of such rejection letter dated 1/10/2016 has also been placed on record. These factual aspects, if read with the last payment made then it can be safely concluded that limitation has not expired - in view of Explanation (a) to Sec. 18 of the Limitation Act, such actions constitute an acknowledgment of debt, which is before expiration of original period of limitation, therefore, the debt is not barred by limitation - there are no merits in the ground of the corporate debtor. Consent of all the members of consortium before filing petition under Sec. 7 of Insolvency Bankruptcy Code, 2016 - HELD THAT:- No such condition exists either in Sec. 6 or 7 of the Insolvency Bankruptcy Code, 2016. Thus, if condition of consent by all the members of consortium of lenders/joint lenders forum is considered mandatory for filing a petition under Sec. 7 of Insolvency Bankruptcy Code, 2016 then it would amount to legislative action which is not in our domain. It would also be inconsistent with the scheme, object and specific provisions of Sec. 3(6) of Insolvency Bankruptcy Code, 2016 which define the term claim in the widest possible meaning - In the present case the financial creditor has filed application individually. Thus, we hold that consent of other members of the consortium is not required. Jurisdiction - power of authority of the person who has filed the petition - HELD THAT:- We have carefully perused the documents produced by the financial creditor and hold that such person has got the requisite authority to file this petition. Consequently, this ground of the corporate debtor is also rejected. Application is admitted - moratorium declared.
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2020 (2) TMI 693
Liquidation of the corporate debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - time limitation - HELD THAT:- In the present case there is no dispute that expression of interest was invited on three occasions on 19.03.2019, 03.05.2019 and on 22.06.2019. Nevertheless, there was no acceptable resolution plan. That apart the initial insolvency period has since expired on 06.08.2019. In the facts CoC with 66% vote share decided to go for liquidation of the corporate debtor. Under the provisions of the Code CoC is the decision taking body and is the competent authority for taking appropriate commercial decision. Adjudicating Authority ought not transgress into the commercial decision and jurisdiction of the CoC. Upon failure of resolution process there being no acceptable resolution plan and as per decision of the CoC with requisite majority voting share; Liquidation has to follow in terms of sub-section 2 of Section 33 of the Code. Adherence to statutory requirement has to be in toto. When the language of the Code is clear and explicit the Adjudicating Authority must give effect to it whatever maybe the consequences - in the absence of any acceptable resolution plan; there is no other alternative but to order in conformity with the requisite majority decision of the Committee of Creditors for liquidation of the corporate debtor under Section 33 (2) of the Code. Liquidation of the company ordered.
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Service Tax
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2020 (2) TMI 692
Business auxiliary service and GTA services provided under two different firms name separately - composite service or not - Appellant owns another proprietary firm viz., SR Transporters who are also registered with the Central Excise department for providing Goods Transport Agency services - only allegation of the department is that both firms are owned by the same person and are located in nearby plots - extended period of limitation - HELD THAT:- It is undisputed that the two firms have been given separate registrations by the department for different activities. There is nothing on record to show that the department has declined to give registration to one of the units holding that both the units are the same and the services rendered by both firms amount to rendition of a single service requiring service tax to be paid accordingly. It is also not in dispute that both the firms have been paying service tax and filing returns as required under the law - the allegation that there was any suppression of facts or wilful misstatement or fraud on behalf of the appellant is unsustainable. Both GTA services and business auxiliary services have separate entries in section 65 of the Finance Act, 1994. To allege that services rendered by two different firms, may be for the same client, merely on the ground that both are co-located and are owned by the same person, in our view, is not correct. Only if the contract is for a composite service rendered by a particular service provider the question of the essential character of the service comes into play. Therefore, we do not find any grounds whatsoever to hold that the services provided by the appellant are composite services. There is no ground, whatsoever, for clubbing the value of services rendered by the two firms. As the basis for demand is incorrect, the demand, interest as well as penalties need to be set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (2) TMI 691
CENVAT Credit - capital goods - immovable goods or not - fabrication of Goliath Crane, Jib Crane, Gantry Crane, Electric Overhead Travelling (EOT) Crane, etc., which are embedded to earth can be treated as excisable goods - Cenvat Credit availed of Inputs/ Capital Goods like HR Plates, MS Flats, MS Coils, Wire Ropes, Rail, Welding Electrode and service used for fabrication of these cranes is admissible to the respondent assessee - HELD THAT:- The cranes fabricated from HR Plates, MS Flats, MS Coils, Wire Ropes, Rail, Welding Electrode cannot be considered as embedded to the earth since they run on tracks fitted in and around the Dry Dock. Thus, they cannot be termed as immovable property. Moreover, merely because they may have to be dismantled to be shifted out of the respondent's premises does not make them immovable property. The services for setting up a factory and any activity relating to business are specifically included within the definition. The Cranes being part of the factory of the respondent where the ships are manufactured and their fabrication being an activity relating to respondent's business, services used for fabrication thereof would be covered within the meaning of input services - Hence also, cenvat credit of service tax paid on such services availed by the respondent must be allowed. Whether invoices issued for distribution of Service Tax paid by office other than that of manufacturer or producer or provider of output service as an Input Service Distributor for distribution of Service Tax is eligible for Input Service Credit and Input Service credit can be availed on such invoices? - HELD THAT:- There is no provision which creates any bar against a head office of a company from distributing credit of service tax paid on services purchased to its various units. Ordinarily, it is only the head office of a company which would place the orders for availing services, receive invoices towards purchases of input services and then distribute the credit of service tax paid to the company's various other units. Nowhere in the Cenvat Credit Rules, 2004 it is provided that for an office of a company to be termed as input service distributor , it must be mentioned in the LOP of the company's suit - Indisputably, the respondent EOU belongs to the company. Indisputably, the Mumbai office is the head office of the company. In fact, the Mumbai office of the company is registered as the Input Service Distributor with the service tax authorities. It is therefore obvious that the Mumbai office, being the head office of the company, which owns several units, receives invoices issued under the Service Tax Rules, 1994 towards the purchases of input services and issues invoice, bill or challan for the purpose of distributing the credit of service tax paid on said services to its various manufacturing units. There is no illegality in this whatsoever. Whether Cenvat Credit of Input, Input Service or Capital Goods shown/ declared in Monthly Return (ER2) filed before Central Excise Officer (incharge of the factory) is admissible and qualifies as Cenvat Credit for the output service provider when same is not shown/ declared in ST3 Return to be filed before jurisdictional Service Tax authorities considering that criteria to qualify the same for such credit are different for manufacturer or Output Service Provider? - HELD THAT:- The input service credit cannot be denied on the ground that it is shown in the ER1 return instead of the ST3 returns since the cross utilization of credit of input and input service is permissible and cenvat credit on input, capital goods and input services used in the manufacturing goods or providing output service is available in common pool and cenvat credit taken during the period shown in ER1 or ST3 return would be the same and there is no restriction on utilization of the common input credit. Whether the Cenvat Credit of duty paid on Input/ Capital Goods and Service Tax paid on taxable services used for fabrication of Dry Dock which is a concrete structure embedded to earth and immovable in nature eligible as Cenvat Credit as per Cenvat Credit Rules, 2004? - HELD THAT:- The items such as cement, steel, etc., used in constructing/ fabricating a Dry Dock, are clearly items used in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and are therefore, inputs within the wide meaning of the said word as defined in the Rule 2(k) of the Cenvat Credit Rules, 2004 and therefore also, the Cenvat Credit of Excise Duty paid on the same cannot be denied. Whether the Tribunal is justified in accepting the photocopy of the invoices as an admissible evidence/ record and remanding the proceeding back to the adjudicating authority for considering the issue afresh? - HELD THAT:- The CESTAT has observed that the Adjudicating Authority had held against the assessee on the basis of a report of the Superintendent which was not disclosed to the assessee and hence, the matter was remanded so that the said report could be provided to the assessee before taking a decision. The CESTAT directed the Adjudicating Authority to take appropriate decision afresh after providing the report and considering the assessee's submission - there are no merit in the submission canvassed on behalf of the appellant that no Cenvat Credit can be allowed in favour of the respondent in respect of the inputs, capital good and inputs service used to fabricate cranes and Dry Dock as the final product of the respondent is exempted from duty. Appeal dismissed - decided against appellant.
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2020 (2) TMI 690
CENVAT Credit - capital units - lifting of Corporate Veil - all units have been merged at a later date, though at the time of receipt of capital goods, all the three units were separate entities and the goods were received and owned by M/s. JSWPL - HELD THAT:- The legal position is that, the ownership of the goods cannot be the criteria for denying the CENVAT credit assuming that the capital goods were purchased by JSWPL. However, the fact remains that, the capital goods were purchased in the name of JSWPL with Consignee SISCOL. The place where the CPP was set up is part and parcel of the factory premises of SISCOL originally and it has never been separated as a separate unit or entity as the water was supplied by SISCOL to CPP and the power being generated by CPP would be fully supplied and would be utilised by the SISCOL alone. The major funds for setting up of CPP also was generated only from the sources of SISCOL. Even before setting up of CPP, permission was sought for by JSWPL from the Deputy Chief Inspector of Factories, Salem on the pretext that, the SISCOL was taken over by Jindal. Further, even under the condition of Rule 2(a)(1) and (1A), the capital goods purchased for the purpose of setting up CPP were fully used only in the factory premises of the SISCOL and therefore, the said contention of the Revenue by the learned counsel that, under definition Clause in Rule 2(a)(1) and (1A) of the CENVAT Credit Rules, the SISCOL was not entitled to take the CENVAT credit does not hold any water, therefore it is liable to be rejected. Even if the CPP is located well away from the main factory of the manufacturer of final product, the capital goods purchased and utilised for such CPP even though not in the same factory premises, even then the manufacturer can take CENVAT credit. This has been explained and amplified by the subsequently amended Rule i.e., 2(a)(1A) of the CENVAT Credit Rules, 2004. Therefore, it has been explained or clarified in Rule (1A) which is in the aid of 2(a)(1). The case of the Revenue that the Assessee i.e., original SISCOL who got merged with JSW Steel Limited and JSW Power Limited, did not have the authority or right to take the CENVAT credit during the relevant point of time for the capital goods used in the CPP set up in the factory premises or vicinity of the SISCOL cannot be accepted, as such stand taken by the Revenue, is unsustainable - there is no hesitation to hold that the order of the CESTAT, which is impugned herein, is fully justifiable and sustainable - appeal dismissed.
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2020 (2) TMI 689
Extended period of limitation - imposition of penalty - benefit of an exemption N/N. 47 of 2002 dated 6 September 2002 as amended and N/N. 6 of 2006 dated 1 March 2006 - It was the case of the Appellant that the Respondent had availed of the benefit in respect of pipe fittings when the benefit of exemption was available only for pipes and not for pipe fittings - HELD THAT:- The Tribunal has found that throughout it s returns the Respondent has clearly mentioned the benefit was availed on the pipe fittings and also in the invoices which were on record. We have not been shown any embargo on the Appellant to examine these returns and invoices before the audit took place. We had granted time to the Counsel for the Appellant to demonstrate this position. If in these facts the Tribunal took a view that this is not a case of suppression of facts, the view taken cannot be stated to be perverse. Merely because another view is possible, is not a ground to interfere. The question of law as framed, in the present case does not give rise to any substantial question of law to entertain this Appeal - Appeal dismissed.
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2020 (2) TMI 688
Permission for withdrawal of appeal - benefit of the scheme introduced by the Union of India, namely, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Permission, as prayed for, is granted - The appeal is disposed of as withdrawn with liberty to revive the same in case for any reason the application made under the scheme is not accepted.
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2020 (2) TMI 687
Permission for withdrawal of appeal - benefit of the Sabka Vishwas [Legacy Dispute Resolution] Scheme, 2019 - HELD THAT:- According to the learned counsel, during the pendency of the present tax appeal, his client is not able to avail the benefit of the aforesaid scheme. In such circumstances, we permit the learned counsel to withdraw this tax appeal. This tax appeal is accordingly disposed of as not pressed without expressing any opinion on the three substantial questions of law, which have been formulated in the present appeal.
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2020 (2) TMI 686
Marketibility/excisability - Milk Crumb - clearing the product to sister concern as intermediate goods - revenue neutrality - HELD THAT:- There seems to be no dispute about various propositions of the law for determining excisability/dutiability of the goods. One of the tests that has to be conclusively established, is that the product is marketable. It has also been held in various decisions that marketability essentially does not mean being marketed - In the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS HINDUSTAN ZINC LTD. [2004 (3) TMI 64 - SUPREME COURT], the Hon ble Supreme Court has specifically laid down that actual purchase or sale is not necessary for determining the marketability of any goods. What needs to be shown is that the product is capable of being taken to the market to be sold and the market recognizes the said product as such. Now examining the various evidences led in the present case, the first and the foremost being that the respondents themselves have been treating this goods as excisable and were discharging the duty demand on that till October 2006. Hence they were themselves treating these goods as marketable contrary to the decision in the case of COLLECTOR OF C. EXCISE, PUNE VERSUS HINDUSTAN COCOA PRODUCTS LTD. [ 1996 (7) TMI 257 - CEGAT, NEW DELHI] - Once they themselves have been doing so, they cannot turn around and say that the product which was marketable till that date has become unmarketable. There is no dispute with regard to the shelf life of the product. Shelf life of the product is one of the determinant of the product being marketable. If some product is having no shelf life or a very short shelf life, then the same could not be held to be marketable as has been held in the decision of the Apex Court in the case of Moti Laminates. That is not the case here. Revenue neutrality - HELD THAT:- If the issue was revenue neutral, the respondent would have paid the duty and taken the credit whatsoever, if the same was admissible. Secondly revenue neutrality can never be ground for not demanding the duty on the excisable goods in the form and manner they are being cleared by the assessee. Thus, the goods in question viz. milk crumb is marketable and hence excisable - appeal allowed - decided in favor of Revenue.
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2020 (2) TMI 685
CENVAT Credit - manufacture of dutiable as well as exempt goods - Rule 6(3) of Cenvat Credit Rules - non-maintenance of separate records - HELD THAT:- It is an admitted fact that the appellant has kept separate records, as required under Rule 6(2) of inputs and capital goods w.e.f. 1.7.2014/1.4.2015. Further, the admitted fact is that the appellant has kept common records of only few common input services, which is of negligible amount and further, the turnover of exempted goods is also negligible as compared to dutiable goods. Further, the appellant has reversed cenvat credit, on being so advised by the Department of the credit attributable to the exempted goods, under intimation to the Department. Thus, it amounts to not taking of cenvat credit at all with respect to the exempted goods. Cenvat credit cannot be denied as it is held that the substantial benefit should not be denied for small procedural lapse. Further, it has been repeatedly held that Rule 6(2) read with Rule 6(3) is not the charging section or provision, it is only the mechanism to reverse the cenvat credit involved in the exempt out (finished goods) by way of a convenient formula. The impugned order suffers with impropriety and the same is mis-conceived - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 684
Seizure of goods during the search operation - Chewing Tobacco or not - HELD THAT:- Through the impugned order, learned Commissioner (Appeals) has upheld confiscation on seized goods worth ₹ 80,000/- holding the same to be chewing tobacco packed in pouches. Further, he also upheld imposition of penalty of ₹ 40,000/- on the appellant. From the record, it is found that though the samples of the seized goods were taken the same were not sent for chemical examination by CRCL, New Delhi and market opinions were obtained. There is no provision in Central Excise law to decide the chemical composition of the goods on the basis of market opinion. The samples should have been sent to CRCL to seek report as to whether the same were chewing tobacco. It was not proved that the seized goods were chewing tobacco - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (2) TMI 683
Adjustment of input tax credit for making pre-deposit - fulfilment of condition under 2nd proviso to Section 51 (wrongly mentioned as 52 in the prayer of the Writ Petitions) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- Input Tax Credit is not intended for being utilised for payment of pre-deposit. At the same time, as per Section 19(18) of the TNVAT Act, 2006, excess input credit, if any, after adjustment under Sub-Section shall be carried forward for the next year or refunded in the manner as may be prescribed. As per Rule 10(10)(b) of the Tamil Nadu Value Added Rules, 2007, in case where Input Tax Credit as determined by the Assessing Officer for any registered dealer, for a year, exceeds the tax liability for that year, it may be adjusted and the excess Input Tax Credit may be adjusted against any arrears of tax or any other amount due from him. If there are no arrears under the Act, or after adjustment there is still an excess of Input Tax Credit, Assessing Authority shall serve Form P upon such dealer. Rule 11 of the aforesaid Rule contemplates the issue of reference of such amounts - excess Input Tax Credit is to be refunded back if after adjustment there is balance available. Therefore, it is evident that if the amount of credit can be refunded, they can also be adjusted towards pre-deposit of the tax liability for the purpose of Section 51 of the TNVAT Act, 2006. The contention of the petitioner that for the purpose of pre-deposit under Section 51 of the TNVAT Act, 2006 an assessee can utilise the excess Input Tax Credit provided accepted, the aforesaid Input Tax Credit itself is not the subject matter of the dispute or where any notice has been issued to deny such tax credit - To deny such right would amount to improper denial of right of appeal to an assessee - petition allowed.
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2020 (2) TMI 682
Imposition of penalty under Section 54(1) (14) of UP VAT Act - sufficient compliance of section 50 of the Act or not - consignment was accompanied with unfilled Form-38 - intent to evade tax or not - HELD THAT:- As per scheme of the Act, 2008 any person, who intends to bring, import or otherwise receive, into the State from any place outside the State any goods other than goods named, and described in schedule-I in such quantity or measure or of such value, as may be notified by the State Government in this behalf, in connection with business, shall either obtain the prescribed form of declaration, in such manner as may be prescribed, from the assessing authority having jurisdiction over the area, where this principal place of business is situated or in case there is no such place, where he ordinarily resides or shall down load from official website of the department in the manner as may be prescribed under Rule 58 or 59. In the instant case it is admitted fact that the revisionist had duly applied for and obtained Form 38 for import of goods and the Column 1 to 4 of the said Form was left blank on account of negligence of the revisionist. It is only on account of non filling of Column 1 to 4, penalty has been imposed upon the revisionist. It has been submitted on behalf of the revisionist that there was no intention to evade tax and the driver of the vehicle carrying the goods was carrying all the relevant documents including the bill/challan/bilty etc. from which the details of goods being carried on the vehicle could have been verified by the officer concerned and therefore there was no occasion for the assessing officer to pass penalty order and also that the grounds were non taxable, inasmuch as there was no intention on the part of the assesee to evade tax. Non-filling up of column no. 1 to4 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008 - In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods. The Tribunal has only observed that non-filing of various columns in Form 38 indicates that there was intention to evade tax and only this ground rejected the appeal of the assessee. The Tribunal has not correctly applied the law in this regard, as they have not given any finding about the intention to evade tax, which is a precondition for imposition of penalty - Revision allowed.
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2020 (2) TMI 681
Exemption under Entry No. 65 to Part B of the IV Schedule to the Tamil Nadu VAT Act, 2006 - sale of refined soya oil in the State of Tamil Nadu - Inter-state sales - It is the contention of the petitioner that during the period in dispute upto 12.7.2011, the dealers engaged in sale of refined oil were exempt from tax up to a turnover of ₹ 500 crores as per Entry No. 65 to Part B of the IV Schedule to the Tamil Nadu VAT Act, 2006 - HELD THAT:- It has been assumed in the impugned order that in the absence of the details of complete addresses of the local buyer s/ purchaser of the petitioner and absence of their TIN number in the sale bills/invoice and in the absence of any receipt proof of payment for the sales effected in the State of Tamil Nadu, the claim of the petitioner in the sales tax return as local sales exempt could not be allowed and therefore the petitioner was liable to pay tax at 4% as not covered by C Form - It has been further stated that there were no stocks at the time of inspection on 26.9.2011 and 27.9.2011 and therefore petitioner was not only liable to pay tax as proposed in the notice but also penalty under Section 27 (3) (c) of the TN VAT Act, 2006. In the impugned order, it has been mentioned that the petitioner has not produced any documents to substantiate receipt of goods from the state of Maharashtra on the strength of Form F issued by the respondent. However, the annexures appended to various Form F give the details of the vehicle number together with the date, challan number and the number of Tin which were allegedly transported - Since this issue would require a proper examination by the respondent, the impugned order cannot be sustained. Appeal allowed by way of remand.
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2020 (2) TMI 680
Reversal of proportionate Input Tax Credit - credit of tax paid on purchase of Duty Entitlement Passbook (DEPB) - section 19 of the Tamil Nadu VAT Act, 2006 - HELD THAT:- It may be mentioned that an Assessing Officer cannot rely on clarifications and instructions of his superior as has been done in the present case - If assessing officers were follow such clarifications of their superior, their orders would be arbitrary. As such, such assessment cannot be completed based on clarifications as such exercise would amount to assessment by circular contrary to the view taken by the Honourable Supreme Court in ORIENT PAPER MILLS LTD. VERSUS UNION OF INDIA [ 1968 (5) TMI 15 - SUPREME COURT] . As an assessing officer, the respondent ought to independently come to a conclusion whether the provisions of the Tamil Nadu VAT Act, 2006 were to be invoked in the facts and circumstances of the case or not - Therefore, initiation of proceedings vide notices dated 15.6.2015 prima facie appears to be ill conceived and proceeds on a wrong assumption of jurisdiction by the respondent. DEPB qualifies as goods within the meaning of the Sales Tax laws and its sale is exigible to tax. DEPB scrips/licence is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006 - Since DEPB scrips/license is liable to tax at the rate prescribed under Entry 70 of Part B of the 1st Schedule of the Tamil Nadu VAT Act, 2006, the petitioner was entitled to input tax credit in terms of Section 19(1) of the Tamil Nadu VAT Act, 2006. It must be remembered that DEPB Scrips were given by the Joint Director of General of Foreign Trade as an export incentive to an exporter under the Export Import Policy. Instead of giving cash refund on exports, the Central Government through the Minsitry of Commerce Trade gave it in the form of credit of duty in the DEPB Scrips/licence which could be used for discharging the Customs duty at the time of import of goods. Such DEPB Scrips/licence could be either used by the exporter himself in whose name such scrips/licence were issued as an export incentive or it can be sold in the open market to be purchased by person like the petitioner like REP Licence. Petition dismissed.
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Indian Laws
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2020 (2) TMI 679
Whether the learned Arbitrator had appropriately considered the matter in its correct perspective and in that light whether the Award of the amount at the premium of 93.12% would be justified and the manner of consideration by the learned Arbitrator without assigning reasons for his Award is sustainable? HELD THAT:- Having taken note of Clause 39 of the Contract Agreement, it cannot be considered as a statutory limitation or bar for the claim in all circumstances. The said Clause no doubt prescribes a method by which the claim is to be put forth in the statement every month. The said requirement will have to be construed as being put in the agreement so as to ensure that the additional work has actually been done, the claim is put forth along with details so that baseless claim is not made at a distant point in time when it will not be possible to determine. Though the Clause also indicates that if such claim is not made, it would amount to waiver, in a circumstance where the claim is ultimately put forth in the forum where an adjudication is made and based on the material if the adjudicating authority is satisfied that the actual work had been done and the contractor being entitled to the extra amount spent by him to carry out the work in an appropriate manner, it would not be just and proper to deny such claim only on the ground that it had not been indicated strictly in the manner as provided in the contract specially keeping in view the nature of work undertaken. To that limited extent a perusal of the Award passed by the learned Arbitrator would indicate that the learned Arbitrator had taken into consideration the letter dated 14.11.1986 wherein the identification of soil which was agreed to. The matter in a normal circumstance ought to have been remitted to the learned Arbitrator to redo the proceedings afresh in accordance with law. Such course ought to have been adopted by us as well. We had proceeded to examine the matter with regard to the validity of the claim keeping in view the time lapse and since the validity of the claim was to be taken note at the appropriate premium if not at the percentage of premium at 93.12% as determined by the learned Arbitrator - In view of our conclusion relating to the claim being sustainable to the extent as indicated by us above at the premium of 35.02%, under Claim Nos.2, 3, and 12 the calculation based on the extent and measurement of the extra items is an exercise which cannot be undertaken herein and as such the opposite party keeping in view the directions herein shall work out the actual amount payable in respect of the extent, measurement, quantity and price based on which the claim is made. The claimant is entitled to the claim for extra items as put forth under Claim Nos. 2, 3, 8 and 12 by working out the difference of cost on the tender premium at 35.02%. On arriving at the quantum of the Page 24 of 26 amount, the same shall be payable with interest at 12% per annum in the manner as ordered by the First Appellate Court. The claim No.1 ordered by the High Court is sustained. Appeal allowed.
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2020 (2) TMI 678
Stamping of Lease deeds - it was the basic contention of the appellants, that the lease deed dated 12.3.1997 being insufficiently stamped had to be mandatorily impounded under Section 33 of the Karnataka Stamp Act, 1957 - invocation of power under Section 11(6) of the Arbitration Act - HELD THAT:- Having regard to Section 35 of the Stamp Act, unless the stamp duty and penalty due in respect of the instrument is paid, the court cannot act upon the instrument, which means that it cannot act upon the arbitration agreement also which is part of the instrument. Section 35 of the Stamp Act is distinct and different from Section 49 of the Registration Act in regard to an unregistered document. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the Registration Act enabling the instrument to be used to establish a collateral transaction. The Scheme for Appointment of Arbitrators by the Chief Justice of Gauhati High Court, 1996 requires an application under Section 11 of the Act to be accompanied by the original arbitration agreement or a duly certified copy thereof. In fact, such a requirement is found in the scheme/rules of almost all the High Courts. If what is produced is a certified copy of the agreement/contract/instrument containing the arbitration clause, it should disclose the stamp duty that has been paid on the original - If the court comes to the conclusion that the instrument is not duly stamped, it has to impound the document and deal with it as per Section 38 of the Stamp Act. A perusal of the clauses of the lease deed dated 12.3.1997 would also reveal, that the lessee had undertaken all the responsibility of obtaining vacant possession of Schedule B property and to secure vacant possession by ejecting the unauthorised occupants. Responsibility of sanctioning the building plans was also undertaken by the respondents. It would further reveal, that it was also agreed between the parties, that in the event of any of the tenants approaching a court of law, such period of litigation shall not in any manner affect the agreed tenure of the lease deed of 38 years - the submission made by Shri Balaji Srinivasan, learned counsel for the respondents, that the agreement was to be registered only after all the tenants were evicted and the building plans were sanctioned is not supported by any of the terms in the lease deed dated 12.3.1997. The High Court has totally erred in relying on the lease deed dated 12.3.1997, which was found to be insufficiently stamped and brushing aside the report of the Registrar (Judicial), when the respondents had failed to pay the insufficient stamp duty and penalty as determined by the Registrar (Judicial) of the High Court of Karnataka - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 677
Dishonor of Cheque - insufficiency of funds - settlement of dispute between the parties - section 138 of NI Act - HELD THAT:- It appears that the dispute is settled amicably between the parties and respondent no.2-original complainant has received amount of ₹ 2,00,000/- from the accused-applicant as full and final settlement and no other amount remains due from the applicant. Reliance placed in the case of VINAY DEVANNA NAYAK VERSUS RYOT SEVA SAHAKARI BANK LTD [2007 (12) TMI 444 - SUPREME COURT] where it was held that taking into consideration even the provision of Section 147 and the primary object underlying Section 138, in our judgment, there is no reason to refuse compromise between the parties. Applying the ratio of the aforesaid decision of the Apex Court to the facts of the present case as well as considering the settlement arrived at between the parties, the revision application is required to be allowed and the parties be permitted to compound the offence - revision application allowed.
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2020 (2) TMI 676
Dishonor of Cheque - section 138 of NI Act - enforceable debt or not - pre-summoning evidence - Section 251 of the Cr.P.C. - HELD THAT:- In the present case, there is no material to conclude that the respondent was carrying on the business of advancing loans. Merely because the respondent had lent money to three or four persons, did not lead to the inference that the respondent had been carrying out the activity of money lending as a business. The respondent had also expressly denied that he had given any loan on interest to public persons - The contention that the debt owed by the petitioner was rendered unenforceable by virtue of the provisions of the Income Tax Act, 1961 is also unmerited. Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹20,000/-. Thus, any person violating the same would attract imposition of penalties under the said Act. However, the same does not render the said debt un-enforceable or precludes the lender from recovering the same - In the present case, the petitioner had clearly admitted to receiving the loan and, therefore, it could not be held that the petitioner had rebutted the presumption that the cheque had been issued in discharge of an enforceable debt. Petition dismissed.
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2020 (2) TMI 675
Dishonor of Cheque - alleged offences punishable under Section 420/406 of the Indian Penal Code - It is the specific contention of the petitioners that the continuance of the criminal proceedings pending against the present petitioners would be an abuse of the process of the Court - HELD THAT:- Initiation of proceedings under Section 138 of the Negotiable Instruments Act, against the complainant prior to filing of the complaint against the present petitioners/accused persons does not ipso facto prove or establish that the subsequent proceedings is a counterblast to the earlier proceedings initiated under Section 138 of the Negotiable Instruments Act. Each case has to be judged on its own merit. In the present case, the opposite party/complainant has described how the complainant company was cheated and suffered loss. The essential elements of the alleged offences under Sections 420/406 of the Indian Penal Code are prima facie present in the allegations contained in the petition of complaint - While dealing with an application under Section 482 of the Code of Criminal Procedure, the High Courts should not assume the jurisdiction and function of the Trial Court and delve deep into the disputed facts. It cannot be denied that the offence of cheating may take place in the course of commercial and civil transaction. Nature of transaction and the intention of the person against whom the allegation is made that he induced the victim/complainant are to be construed to see whether there was alleged commission of the offence of the cheating or not. In the instant case, there are specific averments in the petition of complaint which prima facie indicate that the commission of the alleged offences. As such the contention of the Learned Advocate for the petitioners that the averments of the petition of complaint reveal the factum of loan transaction which is purely civil in nature cannot be accepted at this stage. Territorial Jurisdiction - HELD THAT:- It appears that the petitioners are residing outside the territorial jurisdiction of the Learned Magistrate who issued the process. It is true that at the time of issuance of process under Section 204 of the Code of Criminal Procedure, Learned Magistrate did not make necessary inquiry as contained in sub-Section (1) of Section 202 of the Code of Criminal Procedure. The petitioners raised that ground at the earliest by way of preferring the present revisional application - Non-compliance with the mandatory provisions as contained in Section 202(1) of the Code of Criminal Procedure cannot be considered to be a ground for quashing the proceedings pending against the petitioners. However, at the same time it cannot be ignored that the process under Section 204 Cr.P.C. was issued without taking care of that provisions. The criminal revisional application is disposed of.
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2020 (2) TMI 674
Exemption from payment of tax under Section 83(1)(e) of the Tamil Nadu District Municipalities Act, 1920 - 1st petitioner being a Medical Foundation (Public Charitable Trust) collected amounts for treatment and cost of medicines from the patients/public - HELD THAT:- By an order dated 22.03.2013, the court had quashed the demand and remitted back the case to the 2nd respondent therein to consider the claim of the petitioner whether the petitioner is indeed eligible for exemption or not. Since the Income Tax Department has given certificate post facto approval on 28.02.2016, eligibility for exemption would require fresh consideration on facts. Therefore, impugned order is set aside and the case is remitted back to the respondents. Petition allowed by way of remand.
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