Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 22, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Customs
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13/2019 - dated
21-2-2019
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Cus (NT)
Exchange rates notification No.13/2019 dated 21.02.2019
GST
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09/2019 - dated
20-2-2019
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CGST
Seeks to extend the due date for furnishing FORM GSTR-3B for the month of January, 2019 to 28.02.2019 for registered persons having principal place of business in the state of J&K; and 22.02.2019 for the rest of the States
GST - States
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(27/2018) No. FD 48 CSL 2017 - dated
31-12-2018
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Karnataka SGST
Seeks to amend Notification No. Notification (11/2017) No.FD 48 CSL 2017, dated the 29th June, 2017
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(26/2018) No. FD 48 CSL 2017 - dated
31-12-2018
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Karnataka SGST
Exemption on supply of gold by nominated agency for export of jewellery
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(25/2018) No. FD 48 CSL 2017 - dated
31-12-2018
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Karnataka SGST
Amendment in Notification No. (2/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /15 - dated
31-12-2018
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Nagaland SGST
Seeks to fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-4 for the period July, 2017 to September, 2018
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FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /13 - dated
31-12-2018
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Nagaland SGST
Seeks to fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-1 for the period July, 2017 to September, 2018 in specified cases
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FIN/REV-3/GST/1/08(Pt-1)(Vol 1)/11 - dated
31-12-2018
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Nagaland SGST
Seeks to exempt supplies made by Government Departments and PSUs to other Government Departments and vice-versa from TDS
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CT/LEG/GST-NT/12/17/33 - dated
31-12-2018
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Nagaland SGST
Seeks to extend the due date for furnishing FORM ITC-04 for the period from July, 2017 to December, 2018 till 31.03.2019
SEZ
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S.O. 908(E) - dated
7-2-2019
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SEZ
Inclusion of new members in Noida SEZ Authority - Amendment in Notification No. S.O. 942(E) dated 17th March, 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Due date for furnishing FORM GSTR-3B extended for the month of January, 2019 to 28.02.2019 for registered persons having principal place of business in the state of J&K; and 22.02.2019 for the rest of the States
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Rectification/revision of Form GST TRAN 2 electronically or manually - There is no ground as to why, a person filing Form GST TRAN 2 should not be allowed to revise Form GST TRAN 2 after its initial filing.
Income Tax
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Unaccounted expenditure - Unexplained source of cash - it is difficult to believe that a person who withdraws money from the bank account gives it to someone else for safe keeping - additions confirmed.
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Undisclosed investment u/s.69 - Since, the partnership deed is subsequent to the date of purchase of land, the partnership firm by no means could have made investment for purchase of land. Consequently, no addition on account of unexplained investment in land purchased prior to existence of assessee (partnership firm) could have been made, not even on protective basis.
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Eligible to claim deduction u/s 80IA - Contracts awarded to JVs - constituents of JVs are eligible to claim deduction u/s 80IA
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Penalty u/s. 271(1)(c) - assessee has no tangible explanation with regard to unexplained cash deposit which could absolve the assessee from rigour of penalty u/s. 271(1)(c)
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Penalty u/s. 271(1)(c) - when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute - No penalty.
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Notice issued in the name of the dead person - the issuing of a notice in the name of the wrong person is not a procedural and / or clerical error. Therefore, being a substantive defect, the notice cannot be saved by Section 292B
Customs
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Rescinding Board Circular No. 132/95 on Warehousing-grant of in-bond manufacture facility under section 65 of the Customs Act, 1962
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Amendment in shipping bills - Benefit under Merchandise Exports from India Scheme (MEIS) - petitioner inadvertently opted for “No” instead of “Yes” in the shipping bills - petitioner cannot suffer for an inadvertent mistake committed by him.
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100% EOU - The appellant have sold 90% FOB of value of export of Bearing Housing in DTA and has not exceeded 50% of FOB value of the unit since there is no DTA sale of Precision Automotive Component. The condition is therefore fully satisfied. The denial of concessional rate of duty as per the notification is unjustified.
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Refund of SAD - N/N. 102/2007 Customs - only ground of rejection is that the Truck No. mentioned in the requisite documents is not tallying with the truck No. mentioned on the invoice/ receipt. - Merely because typographical error, refund cannot be denied.
Corporate Law
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Extension for last date of filing initial return in MSME Form I
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Oppression and mismanagement - Holding BOD meetings outside India - Nothing is shown that there is any restriction on the place where Board of Directors should hold their meetings - Merely because the appellant could not attend the meeting, the allegation of oppression and mismanagement cannot be proved.
Service Tax
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Classification of services - Manpower Recruitment and supply services or not - the workers who are taken by the appellant for executing the work order are under the control of the appellant and not under M/s. Caltex Gas India (P) Ltd. - the nature of activity does not fall within the definition of manpower recruitment and supply service
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Valuation - tyre re-trading activity - They were found to have imposed a stamp on the invoice indicating the split up of the overall invoice value into the material and spares cost as well as labour charge and have discharged the service tax liability only to the extent of labour charges. - Benefit of N.No. 12/2003 allowed.
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Valuation - inclusion of cost of accommodation facility - there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value which has to be taxed u/s 67.
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Extended period of limitation - The service provider herein is Government undertaking. Service recipient is also a public sector undertaking. There cannot be a single good reason for either of the two to have an intent to evade the tax. - Demand set aside.
Central Excise
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CENVAT Credit - inputs or capital goods - As per Cenvat Credit Rules, capital goods, as well as input are defined under Rule 2(a) and 2(k) respectively. Perusal of both these provisions makes it clear that both the terms are relative to the use they are put to. No doubt, grinding wheels are specifically mentioned in the definition of capital goods to be known as capital goods but they can acquire the relative character of being the input.
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Excisability/marketability - waste - waste of base cream cleared without consideration - Dumping of waste cannot be equated to clearance of excisable goods.
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Penalty u/r 26 of CER - Clandestine removal - Once the penalty was imposed on a partnership firm, no separate penalty should be imposed on the partners separately for the reason that the partnership firm itself is consisting of partners
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Classification of goods - Gloves used in ‘Wicket Keeping’ and ‘Batting’ in the game of cricket - through notification issued for the purpose of fixing drawback rate, the same goods were classified under Chapter 95 and therefore, they are classifiable under Chapter 95 and that Revenue could not change its stand.
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Valuation - processed fabric - inclusion of the shrinkage factor - When the total quantum of the grey fabric received has been taken into account while determining the landed cost of grey fabric then the shrinkage factor is part of the total value, and there cannot be further addition to the same.
VAT
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Validity of assessment order - the petitioners did not file the Auditor Statement in the prescribed format in Form WW within time - The delay in filing the Auditor Report cannot be the reason to deny the benefit to the petitioners out of such report
Case Laws:
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GST
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2019 (2) TMI 1218
Rectification/revision of Form GST TRAN 2 electronically or manually - the present scheme of CGST Act does not allow rectification or revision of the Tran 2 form - Whether an assessee can rectify/revise GST TRAN 2 form subsequent to its uploading? - Held that:- Since the Rules of 2017 do not contemplate revision of Form GST TRAN 2, the common portal available under the Act and Rules of 2017, does not provide for revision of Form GST TRAN 2 in the electronic manner. The petitioners are therefore unable to file a revised declaration under Form GST TRAN 2 electronically. There is no mechanism under the Act or Rules of 2017 to file any document manually. Taxing statutes are to be strictly construed. However, such interpretation should not lead to a reckless or a mindless mechanical application of the statute. In the present case, the petitioners contend that, there are mistakes in Form GST TRAN 2 requiring revision. The Form GST TRAN 2, at best, is an admission of the person filing the same with regard to the contents of the document. Admission is a strong evidence against the person making it. However, law contemplates that, the person making such admission has the opportunity to explain the same - The Form GST TRAN 2, at best can be an admission allowing the authorities to inform the state of affairs of the first petitioner in relation to the subject matter governed by such form. However, neither the Act of 2017 nor the Rules of 2017 can be read to mean that, the same excludes the right of a person making an admission, to forfeit the opportunity to explain it. Neither the Act of 2017 nor the Rules of 2017 forfeits the right of a person making an admission to substantiate that, such admission was made by mistake or was untrue. A person filing a Form GST TRAN 2 therefore, should be afforded an opportunity, to explain the Form GST TRAN 2, in the event, such person chooses to do so. Moreover, Form GST TRAN 2 will be taken into consideration for the purpose of assessment. In the assessment proceedings, the person filing the Form GST TRAN 2 would be at liberty to establish by cogent evidence that, the figures filed therein are incorrect or untrue. The Assessing Officer will be obliged to take into consideration such a stand while pronouncing upon the assessment - There is no ground as to why, a person filing Form GST TRAN 2 should not be allowed to revise Form GST TRAN 2 after its initial filing. The authorities are directed to allow the first petitioner to file a revised Form GST TRAN 2, either electronically or manually, in accordance with law, within four weeks from the date of communication of this order - petition allowed.
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2019 (2) TMI 1217
CENVAT Refund - Tran-1 Claim has not been filed by the petitioner online within stipulated time - Section 140 of the CGST Act, 2017 read with Rules 117(1), 118, 119 & 120 of the CGST Rules, 2017 - Held that:- It shall be open to the petitioner to apply for rectification of Tran-1 to the Nodal Officer within 15 days from the date of receipt of certified copy of this Order. It is, however, further clarified that in case the claim is made by the petitioner within the aforesaid period, the officer concerned shall take necessary action thereon before 31.03.2019, in accordance with law - petition disposed off.
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Income Tax
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2019 (2) TMI 1216
Condonation of delay of 290 days - HELD THAT:- In the present case a self-operating order was passed by the Prothonotary, High Court, Bombay as a result of which Income Tax Appeal (Lodging) stood dismissed for nonprosecution. Notice of motion seeking condonation of delay of 290 days in curing the defects was later rejected by the High Court by its order dated 22.03.2018, which is presently under challenge. All other matters also stood dismissed for same reason. This Court had passed an order on 13.11.2018 seeking an affidavit from the Department as to who were responsible in the matter for not curing the defects in time. An affidavit has now been filed by Deputy Director of Income Tax, Directorate of Legal and Research, New Delhi,
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2019 (2) TMI 1215
Disallowance u/s 14A - application of Rule 8D(2)(ii) - AO had fallen into error in overlooking that the assessee had deployed its own substantial part of funds to derive a tax exempt income - HELD THAT:- As examined the facts of this case we are not inclined to entertain this petition. The Special Leave Petition is dismissed. Pending application(s), if any, stands disposed of accordingly.
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2019 (2) TMI 1214
Addition u/s 40A(3) - disallowance of cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of payment - HELD THAT:- In view of Circular No. 3 of 2018 dated 11 July 2018 issued by the Central Board of Direct Taxes and the tax effect being less than Rs one crore, we dismiss the Special Leave Petitions only on this ground.
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2019 (2) TMI 1213
Assessment u/s 153A - allegation of generation of unaccounted money and also transfer of such money in exchange of share capital - proving any accommodation entry - reliance on third party statement - CIT(A) and ITAT deleted the additions - HELD THAT:- No reason to interfere with the impugned order. The special leave petition is, accordingly, dismissed.
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2019 (2) TMI 1212
Claim of carry forward of the loss as the return having been filed in Saral Form 2-D by the due date - change inform - Whether in view of Section 139 (1) read with Section 139 (3) of the Income Tax Act, the return in the prescribed From ITR (5) having been admittedly filed on 23.12.2008, i.e. beyond the due date, no claim can be legally allowed in respect of carry forward of the losses? - assessee has not sought to gain any unfair advantage in this matter by filing in the old Form and he did later on comply with the conditions of the new Form and it appears that the same return was filed - HELD THAT:- SLP dismissed.
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2019 (2) TMI 1211
Notional sales tax exemption - nature of receipt - whether a capital receipt not liable to Income-tax? - capital or revenue receipt - HELD THAT:- We notice that this issue has been elaborately discussed by the Commissioner (Appeals). He took note of the various terms of the scheme of State of Uttar Pradesh and noted that depending on the location of the units of the eligible assessee, sales tax exemption was granted in terms of percentage of capital investment. The scheme itself was founded on the basis of attracting capital investments in certain backward areas. That bring the position, the scheme of Utter Pradesh which came up for consideration before the CIT (appeals) and Tribunal in the present case is substantially similar. Though obviously cannot be identical to the sales tax exemption scheme of the Government of Gujarat which was examined in case of M/s. Indian Petrochemicals Corporation Limited [2019 (1) TMI 1364 - BOMBAY HIGH COURT]. Under the circumstances, the first question raised by the revenue is not entertained. Disallowing the deduction u/s 80IA - assessee had set up a captive power generating unit - rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued - HELD THAT:- As decided in COMMISSIONER OF INCOME TAX-LTU VERSUS M/S RELIANCE INDUSTRIES LTD. [2019 (2) TMI 178 - BOMBAY HIGH COURT] the profits of the business of generation of power worked out by the Assessee on the basis of the price that it paid to TPC for purchase of power continues to be the best basis even after the order of MERC and therefore the same has to be accepted as was done in the past and as approved by the ITAT in Assesssee's case. See Reliance Infrastructure Limited Vs. Addl. CIT [2011 (1) TMI 36 - ITAT, MUMBAI] - Decided against revenue
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2019 (2) TMI 1210
Reopening of assessment - benefit of Section 11 - Held that:- We are prepared to accept the contention of the learned counsel for the petitioner that the sum of ₹ 76.59 lacs is not accurate and in fact, the petitioner trust had received a sum of ₹ 68.16 lacs from Hinduja Hospital. However, a mere minor inaccuracy in indicating the figure in the reasons recorded, would not shake the very foundation of the reasons so as to nullify the notice of reopening based on such reasons. We are also prepared to proceed on the basis as contended by the learned counsel for the petitioner that there may be some differences in the situation emerging out of the return for the assessment year 2014-15 and the present one. When we examined the situation in the present year, on the basis of reasons recorded by the Assessing Officer, we are unable to accept either of the two contentions. Once, we proceed on the basis that the petitioner Hinduja Foundation received sizable donation from Hinduja Hospital and the Assessing Officer asserts on the prima facie information available with him that such sum was spent on the officers / directors of Hinduja Hospital, the question of applicability or non-applicability of Section 13(3) (b) in the context of the provisions contained in Section 13(1) (c)(ii) would arise. When such an issue was never examined by the AO during the original scrutiny assessment, we would be well advised not to carry out an incisive inquiry into the question which would an inquiry, necessarily be factual as well as legal. An opinion of law can be rendered only once facts are conclusively established. It is a settled law that at the stage of examining the validity of notice of reopening of assessment in a Writ Petition, the Court would not, in exercise of the writ jurisdiction, go into the sufficiency of the reasons recorded by the AO. Reference in this respect can be made to the decisions of the Supreme Court in the case of Raymond Woollen Mills Ltd Vs. I.T.O. & Ors. [1997 (12) TMI 12 - SUPREME COURT] and in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt Ltd [2007 (5) TMI 197 - SUPREME COURT]. The petition is dismissed.
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2019 (2) TMI 1209
Reopening of assessment - validity of notice - requirement of issuing a notice in the name of correct person - notice of reopening in the name of the deceased assessee - HELD THAT:- Requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire jurisdiction to reopen the assessment. This is evident from Section 148 of the Act, which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee. The assessee on whom the notice must be sent must be a living person i.e legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the jurisdictional requirement. Therefore, both the impugned notice dated 29.3.2018 and the impugned order dated 13.11.2018 are quashed and set aside. It is made clear that this order will not prohibit the Revenue from issuing a fresh notice for reassessment, if requirement of Sections 147/ 148 of the Act are satisfied, including the limitation period therein. - Decided in favour of assessee.
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2019 (2) TMI 1208
Reopening of assessment - crux of the petitioner's objection to the notice of reopening of assessment was that there is no income chargeable to tax which had escaped assessment - liability to pay capital gain tax on the proceeds of sale of shares - HELD THAT:- Minute perusal of the reasons recorded would show the ground pressed in service by him is that the petitioner had earned capital gain out of sale of shares which was not disclosed and therefore, income chargeable to tax had escaped assessment. This was also the line adopted by the Assessing Officer in the order disposing of the objection. As perused the detail objections raised by the petitioner and the documents produced alongwith the same and also the order passed by the Assessing Officer disposing of such objections. We do not find that the Assessing Officer had dealt with the contention of the petitioner that the petitioner is in a position to establish that the shares in question were held by Savoy Finance for a period in excess of one year and therefore, there was no liability to pay capital gain tax on the proceeds of sale of shares. In facts of the present case, therefore, we ask the AO to consider this objection of the petitioner and give his specific finding through a speaking order. For this limited purpose, we place the matter back before the Assessing Officer. AO shall pass a further order dealing with this specific objection of the petitioner. In facts of the case, the Assessing Officer may give personal hearing to the authorized representative of the petitioner. Further order may be passed preferably within two months from today.
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2019 (2) TMI 1207
Unaccounted expenditure - Unexplained source of cash - Held that:- The two revenue authorities and the Tribunal concurrently came to the conclusion that the amount of ₹ 6 Lacs represented the assessee's unaccounted expenditure. Secondly, the Tribunal did not accept the assessee's explanation that the amount was withdrawn from the bank account and gave to Ms. Rani Mukherjee for safe keeping on the ground that it is difficult to believe that a person who withdraws money from the bank account gives it to someone else for safe keeping. The assessee had not offered any explanation why he took such a recourse. It was not the case of the assessee that he needed urgent cash on hand for which purpose such withdrawal was made. All in all, the entire issue is factual. No perversity in the findings is pointed out. No question of law arises.
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2019 (2) TMI 1206
Deduction u/s 54 for investment of capital gain in purchase of new residential house in Panama - allowing the shifting of tax base of India to foreign country, whereas provisions of Income Tax act extends to India only and not extra territorial - assessee is a NRI and resides in Taiwan - HELD THAT:- We find that the specific provision of section 54 as it is stood prior to the amendment was examined by the tribunal. It was held that the investment abroad satisfies the requirement of provisions of section 54. No contrary decision has been produced before us. We also note that the Hon’ble Delhi High Court in the case of Honda Siel Power Products Ltd. vs. Deputy Commissioner of Income-tax [2011 (2) TMI 1184 - DELHI HIGH COURT] has expounded that non consideration of a coordinate bench order of the Tribunal will result in the tribunal order suffering from mistake apparent from the record. Accordingly in the background of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld. CIT(A). - Decided against revenue
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2019 (2) TMI 1205
Denying deduction u/s 80P(2)(a) in respect of interest received - assessee had advanced loan to its members, who in turn, had authorized the employer i.e. Ghatge Patil Group of Companies to deduct installments and interest due from their salaries and remit the same to Co-operative Society - HELD THAT:- There was default in such remittances and various cases were filed. As per directions of the District Deputy Registrar, Co-operative Societies, Kolhapur, the assessee not only received installments but also received interest. During the year, it had received interest of ₹ 23,74,646/- and the question was that such interest was received during the course of carrying on its activity of providing credit facilities to its members and hence, deductible under section 80P(2)(a)(i) of the Act. We find merit in the plea of assessee in this regard. The interest became due to the assessee from Ghatge Patil Group of companies, since it had failed to remit the amount of installments deducted by it along with interest to the Co-operative Society of the employees of the said concern. Section 49(3) of the Maharashtra Co-operative Societies Act postulates that the employers of members were mandatorily part of the main activity of the assessee society i.e. providing credit facilities to its members. Once the amount is received from the entity which was part of the main activity of the Co-operative Society, then the same is received during the course of carrying on the business activity and hence, eligible for claim of deduction under section 80P(2)(a)(i) - Decided in favour of assessee.
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2019 (2) TMI 1204
Undisclosed investment u/s.69 - payment of ‘on money’ for purchase of land admeasuring 3 acres 9 guntas - HELD THAT:- CIT (Appeals) in First Appellate Proceedings directed the AO to ascertain the status of income offered/taxed on substantive basis in the hands of other partners. The Assessing Officer in his report pointed that apart from Shri B.R. Patil no other partner of the firm has admitted investment in land in their respective return of income. As observed that it was the first year of existence of the firm and the land in question was purchased before registration of the partnership deed. Thus, in absence of income of its own, the firm could not have invested for purchase of land. Therefore, the investment has to be considered in the hands of the partner as their respective unexplained investment. Since, partners of the firm failed to respond to the notices issued by Assessing Officer, the entire investment of ₹ 15,45,00,000/- was added as unexplained investment u/s.69 of the Act, on protective basis in the hands of assessee partnership firm. It is an undisputed fact that the registered sale deed for purchase of land was executed on 10.10.2007 and the partnership deed was executed on 26.10.2007. Since, the partnership deed is subsequent to the date of purchase of land, the partnership firm by no means could have made investment for purchase of land. Consequently, no addition on account of unexplained investment in land purchased prior to existence of assessee (partnership firm) could have been made in the hands of assessee, not even on protective basis. No infirmity in the order of CIT (A), hence, the same is upheld and the appeal of Revenue is dismissed.
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2019 (2) TMI 1203
Penalty u/s 271(1)(c) - addition of cash deposits - withdrawing cash from one account and re depositing in another account - HELD THAT:- There was no rational in withdrawing cash from one account and re depositing in another account because she could have issued cheques or RTGS. Although this view taken by the AO was accepted by the assessee and the addition made on account of unexplained cash deposits was not disputed by her in appeal, the fact remains to be seen is that there were withdrawals made by the assessee in cash from her bank account with UBI and source of cash deposits to that extent was explained. As rightly contended on behalf of the assessee before the authorities below as well as the before the Tribunal, the assessee had declared a total income of ₹ 5,38,680/- for the year under consideration while her husband had declared a total income of ₹ 32,30,900/- for the year under consideration and keeping in view this quantum of family income declared for the year under consideration as well as for the earlier years, the availability of cash to the extent of ₹ 1,55,000/- out of savings of the year under consideration as well as earlier years cannot be doubted. We are of the view that even though the addition of ₹ 1,55,000/- on account of unexplained cash deposits was made by the AO and the same was accepted by the assessee, the said amount cannot be considered as concealed income of the assessee for imposition of penalty u/s 271(1)(c). - Decided in favour of assessee.
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2019 (2) TMI 1202
Fees levied u/s 234E - Intimations made u/s 200A - provision in the Act facilitating issuing and serving orders by electronic mode - contention of the assessee that as per proviso to section 200A, intimation u/s 200A(1) shall not be sent before the expiry of one year from the end of the FY in which the statement is filed - HELD THAT:- Prior to 01.06.2015, there was no mandate, as per the Statute, to make any adjustment on account of levy of fees u/s 234E while processing TDS returns u/s 200A. The amendment made to section 200A w.e.f. 01.06.2015, giving power to make adjustment on account of fees u/s 234E while processing returns u/s 200A to be retrospective in nature, stating that this power given to the AO is a machinery provision while the substantive provision of the power to levy fees u/s 234E was always there on the Statute from 01.06.2012 In the case under consideration, on perusal of record, we find that the TDS returns filed by the assessee for the relevant period i.e., FYs 2012-13 to 2015-16 and 1st Quarter i.e. 01/04/2015 to 31/05/2015 were prior to 01/06/2015. Therefore, we direct the AO to delete the fees levied u/s 234E. Accordingly, the grounds raised on this issue in all the appeals under consideration are allowed.
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2019 (2) TMI 1201
Assessment u/s 153A - Fresh claim in the return of income filed in response to notice issued u/s 153A - Held that:- We hold that the assessee can make a fresh claim in the return of income filed in response to notice issued u/s 153A. Accordingly, ground raised by the revenue in this regard is dismissed. Eligible to claim deduction u/s 80IA - Contracts awarded to JVs - Held that:- Assessee can claim the same as a constituent of the above JVs, the coordinate bench of ITAT, Visakhapatnam in the case of Transstory (India) Ltd. (2011 (7) TMI 810 - ITAT VISAKHAPATNAM ) held that the constituents of JVs are eligible to claim deduction u/s 80IA. - Decided in favour of assessee
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2019 (2) TMI 1200
Deduction u/s 37 - allowable business expenditure - assessee purchased the IPL cricket match tickets to distribute them amongst its long standing customers to garner their goodwill and improve its business relations - HELD THAT:- According to us, assessee’s submissions in support of its claim u/s 37 is a plausible and acceptable submission. This is akin to distribution of gifts or articles on special occasions to the customers and such expenditure has been held to be business expenditure. Further, in reply to Revenue’s contention that the assessee has failed to produce any evidence in support of its contention, the learned Counsel for the assessee has filed a list of the customers amongst whom the IPL Cricket match tickets have been distributed. DR opposed the admission of this evidence at this stage and submitted that, if the Tribunal were to consider the same, then the said evidence should be remanded to the file of the AO. This list was admittedly not produced before any of the authorities below. Therefore, we treat it as additional evidence and admit the same and remand the issue to the file of the AO to verify whether these parties were the customers of the assessee and whether they were given the alleged IPL seasonal tickets. Assessee’s appeal is treated as allowed for statistical purposes.
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2019 (2) TMI 1199
Levy of penalty u/s 271(1)(c) - disallowance of provisions for doubtful debts, electricity duty and sales tax set off - HELD THAT:- As the claim of aforesaid expenses is discernible from the return of income profit and loss account balance-sheet hence the same it is not amount to concealment of income or furnishing inaccurate particulars of income. This is a factual position, therefore, the penalty u/s 271(1)(c) of the Act is not leviable. We are, therefore, of the considered view that the penalty is not sustainable in the law in the light of ratio laid down by Hon’ble Supreme Court in the case of CIT Vs. Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] wherein it was held that merely because the assessee has claimed the expenditure which claimed was not accepted or was not acceptable by revenue, penalty u/s 271(1)(c) of the Act cannot be attracted. Thus penalty is not exigible in respect of disallowance of provisions for doubtful debts, electricity duty and sales tax set off. - Decided in favour of assessee.
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2019 (2) TMI 1198
Rejection of books - Held that:- Complete books of account are easily retrievable and accordingly, was drawn on the basis of contemporary records as well as seized material. He explained that bulk of the transactions were undertaken by the assessee through brokerage firms on behalf of the family members and corporate entities promoted by them, all of whom have been assessed by the same AO. It was explained that these entities have placed copies of contract note, bills and others materials during the course of assessment/ appellate proceedings, all of which, records were available with the AO to undertake verification but the same was not carried out by the AO. We are of the view that it is coming out that the books of account are not maintained in regular course of business and assessee itself admit that these are incomplete and does not possible to reconcile each and every entry. Hence, we are of the view that the AO has rightly rejected the books of account and which CIT(A) also confirmed. In view of the above position, we dismiss this ground of assessee’s appeal. Addition on account of Money Market Oversold Position (MMOP) including addition on account of 11.5% central loan 2011 - Revenue is in appeal against deletion of addition in relation to money market oversold position - Held that:- Despite several reminders and even after taking up the matter with the superior officers no report was submitted by the AO. Further, it is observed that though the CIT(A) has himself verified the various evidences placed on record before him and given a detailed finding in case of each of the security he has directed the AO to re-verify the same and recomputed the oversold position. Ld Counsel stated that the AO has carried out detailed verification by taking almost a year before passing the order u/s 154 of the Act dated 02.05.2018 in respect of the order giving effect dated 28.09.2017. Vide order u/s 154 of the Act the AO has granted relief to the extent of ₹ 856.75 crores in relation to money market oversold position. No contrary fact was brought before us by revenue. Addition on account of oversold position in 11.5% Central Loan - Held that:- We noted from the order of the CIT(A) that he has given a detailed finding on this issue. He has categorically mentioned in his order that the assessee has filed ample evidences for explaining the nature of the transaction in respect of which the additions were made. CIT(A) has not set aside the assessment. Direction given by this appellate authority to the lower authority for verification will not tantamount, in our opinion, to setting aside the assessment. It is a case where the CIT(A) gave the relief and allowed the ground of the assessee but subject to the verification by the AO. Power of the CIT(A) u/s 251 of the tax Act. In our opinion, what the CIT(A) has done is that he has directed the AO to do what he has not done while making an assessment. We, therefore, are of the view that once the AO after verification of the evidences and the material filed by the assessee, gave relief to the assessee. This proves that the AO was satisfied with the explanation of the assessee with regard to MMOP and to the extent he found explanation given by the assessee to be proper, he allowed the relief to the assessee. It is the satisfaction of the AO which matters not the satisfaction of the Ld CIT-DR. If the AO is satisfied with the explanation of the assessee and allowed the relief to the assessee while giving effect to the order of the CIT(A).- Decided against Revenue. Difference of purchase and sales in respect of 11.5% Central Loan-2011 - Held that:- In the absence of any cogent material or evidence to support the said negative balance, we are of the view that the addition of ₹ 29,70,53,629/- cannot be survived. It is a settled law if the revenue wants to tax any income; the onus is on the revenue to prove that the assessee has earned income. Even otherwise, for the negative opening balance, addition cannot be made as per the provisions of Section 69 of the Act in the impugned assessment year. If an addition has to be made that has to be made in the earlier assessment year from which negative opening balance has been brought forward. We, accordingly, delete the addition of ₹ 29,70,53,629/- out of the sum of ₹ 223,83,58,173/-. Addition of oversold units - Held that:- The assessee has asked for the details of such oversold units but no such details were provided to the assessee so that the assessee can contradict the same. Before us also the Ld Counsel taken the said contention but the CIT-DR even though relied on the order of the AO and brought voluminous record but could not bring to our knowledge any specific record or evidence which may prove that the assessee has sold such Units 64. In the absence of any evidence, which may prove that the assessee has oversold Units 64, we cannot sustain this addition and we are bound to delete the same. No addition can be made or sustained merely on the basis of the suspicion, howsoever strong it may be. Addition on account of Money market unexplained stock - Held that:- Set aside this issue and restore it to the file of the AO with the direction that the AO shall re-verify the evidences in respect of claim of the assessee for 9% HUDCO Bonds as well as Units 64 whether they belong to the assessee or not in case if he finds these assets do not belong to the assessee, the amount included in the addition of ₹ 66,18,18,047 in respect of these assets would stand deleted out of the said addition. Addition on account of Money Market Trading Profit (i.e. Money Market Difference received) - Held that:- AO while making the addition under the head money market difference has not considered the sum of ₹ 39,19,17,531/- which was paid by the assessee as is apparent from Annexure K and received by UCO Bank on account of SBI Mutual Fund, which we verified during the course of hearing. We, therefore, delete the said addition. Thus, the Ground No. 9 is allowed. Addition on account of Interest on Money Market Securities - Held that:- The Ground taken by the assessee could not be fully allowed but since the assessee has not received the interest to the extent of ₹ 26,41,49,667/- in any of the bank account, the interest to that extent cannot be added in the income of the assessee. We, therefore, delete the addition of ₹ 26,41,49,667/-. Thus, this issue of assessee’s appeal and that of Revenue’s appeal is partly allowed. Addition of Share Market Trading Profit - Held that:- Neither the assessee nor the Ld CIT-DR could bring the evidence to what extent the assessee has traded in the shares on own account and on behalf of his client. The appeal relates to the AY 1992-93 and already more than 26 years have passed and this issue has been restored again and again to the file of the authorities below. We, therefore, in the interest of the justice and fair play to both the parties and to end the litigation direct the AO to treat 50% of such profit on share trading belonging to the third party on whose behalf the assessee might have carried out the share trading. Thus the addition is reduced to 50% of ₹ 16,02,65,407/-. Thus, the assessee gets a relief of ₹ 8,01,32,703/-. Thus, this ground in assessee’s appeal is partly allowed. Addition on account of share market speculative profit - Held that:- As the initial onus lies on the Revenue to prove that the said income has been earned by the assessee on his own account, but the assessee could not bring any evidence that he has not earned any income on his own account and the issue has come before this Tribunal third time. In the absence of burden being discharged by the Revenue, we cannot shift the burden of proving otherwise on the assessee. This matter, we noted, relate to the AY 1992-93 and is pending for the last over 25 years by that time at least one generation would have changed. Since, the revenue could not discharge its onus and addition in our view is based just on surmises and conjectures. We, therefore, delete the addition. Thus, this ground of assessee’s appeal is allowed. Addition on account of profit on sale of shares in shortage - Held that:- AO failed to appreciate the fact that the shares were either in physical possession of the assessee or were stolen or seized or were found to be registered in the names of third parties. The presumption that the shares have been sold without any piece of direct or indirect evidence or explanation is bad in law and needs to be reconsidered and accordingly the entire addition deserves to be deleted. There had been search and seizure action against the assessee and assessee group on 28.2.1992, the evidences regarding sales outside the books must have been found if the assessee made any sales. No such evidence being found in respect of unaccounted sales being made as otherwise such evidence would have been produced or brought before us by the revenue. This is the settled law that Suspicion whatever strong it may be, it cannot take the place of actuality. We agree with the submission of the Ld A R that when the purchases have been estimated on average cost, how the sales have been estimated merely on the basis of the rate prevailing as on 31.3.1992 and how these shortage computed as on 8.6.92 will relate to this assessment year 1992-93. Even no material or evidence has been brought before us working out the shortage of shares as on 31.3.1992 so that the addition could be co-related to this assessment year if it has to be sustained on the basis of material if brought on record. In view of aforesaid discussion, we are of the firm view that the additions have been made by the assessing officer merely on estimate basis without bringing the evidences in this regard. Therefore, we delete the addition Addition on account of Badla Income - Held that:- We asked the ld. DR the basis and the supporting evidence on the basis of which this compilation has been made and also provide it to the ld. AR but no such evidences and the material were placed before us or provided to the assessee as contended by ld. A.R. We pursued the remand report also as has been relied by ld. DR and had been referred to by us in the preceding paragraph. We, therefore, respectfully following our finding given in the preceding paras while disposing of grounds, delete this addition Addition on account of share market oversold position - Held that:- If the revenue is making any addition, onus is on the revenue to prove that the assessee has earned the income. The revenue since has not produced any material or evidence to prove that the assessee has earned this income during the year, the addition so made cannot survive. We, therefore, delete the said addition. Thus, the ground no.18 of assessee’s appeal is allowed and that of the revenue is dismissed. Unexplained Money under section 69A - Held that:- DR although relied on the order of the CIT(A) but could not adduce any cogent material or evidence to contradict the evidence filed by the assessee. These evidences clearly prove that these four amounts totaling to ₹ 123,05,66,015/- cannot be regarded to be unexplained amount. We, therefore, delete the said addition. For the sum of ₹ 1,80,50,965/-, we perused the explanation given by the ld. AR to which we could not be satisfied. In our view, once the assessee has deposited the money in his bank account, the onus lies on the assessee to explain the nature and source of such deposit consisting of each and every entry. In the absence of onus being discharged by the assessee, we sustain the addition of ₹ 1,80,50,965/-. So far the deletion of the addition by the CIT(A) amounting to ₹ 25,48,16,855/- is concerned, we do not find illegality or infirmity in the order of the CIT(A) in deleting the said addition and this amount also in our view cannot be regarded to be the unexplained money. Addition on account of transactions with Mr. Niranjan J. Shah - Held that:- No independent evidence corroborating the statement of Niranjan shah has been brought on record. The report of JPC, in our view cannot be regarded to be the incriminating material to be used against the assessee. In view of this, we are bound to delete the said addition. Addition on account of alleged payment to June Investments Pvt. Ltd. - Held that:- The addition has been made merely on the basis of the document found from the possession of third party, no collaborative evidence is being brought on record by way of statement on behalf of June Investments P Ltd or by way of any evidence being found or seized during the course of search being carried out at the premises of the assessee showing that actually the assessee hold or purchased the shares of M/s Lan Steel. Onus is on the revenue to prove that the assessee has actually paid the money to third party during the impugned assessment year and for which the assessee is not able to explain the source. No addition can be sustained merely on the basis of assumption and presumption without given the opportunity to the assessee to controvert the same. Addition on account enhancement on account of Interest receivable from related parties - Held that:- Tribunal, thus in AY 89-90 deleted the addition before us even though the Ld. DR vehemently relied on the order of the authorities below but could not bring to our knowledge any decision contrary to the decision of the Tribunal for the AY 89-90. In assessee’s own case holding that interest income has to be recognized in the case of the assessee on actual receipt basis. The ld. DR even did not deny that the assessee was following the cash system of accounting in respect of interest income - addition to be deleted Addition on differences in the books of account - Held that:- The assessee has also submitted complete reconciliation in these cases and ultimate difference unreconciled of their inter account considering their proprietorship concern also came to ₹ 2,18,397/- only. In the case of Jyoti Mehta also, while making detailed submission in respect of ground no 15 it was worked out that ultimately there was no difference and the difference unreconciled remains between Ashwin Mehta and Harshad Mehta to the extent of ₹ 2,80,397/-. We therefore reduce the addition to ₹ 218397/-. Addition on account of alleged liabilities shown as other income - Held that:- The addition has been made on the presumption that the assessee would have been benefited by this amount. This is the settled law that no addition can be made until and unless the income is accrued or received by the assessee. No iota of evidence was brought to our knowledge which may prove that an income had accrued to or received by the assessee. Income tax is leviable on the income which is chargeable as per the provision of section 5 of the Act. Section 5 of the Act nowhere makes any nominal income to be chargeable to tax. We, therefore, in the absence of any evidence being placed before us about the accrual or receipt of the income by the assessee, delete the addition so made Set-off of addition made on account of sources of income against the expenses/ investment/application of such source based on telescoping theory - Held that:- Direct the AO that in case any addition is survived in the preceding paragraphs on account of unexplained receipts or profit on trading in shares and also on account of unexplained investments or expenditures, to allow set off and telescoped of these additions and such unexplained investments or unexplained expenditures should be deemed to have been made or incurred out of such receipts or profit on trading in shares etc. The AO will compute the income after giving effect to this order after considering these directions and after confronting the assessee. Levy of interest u/s 234A, 234B and 234C - Held that:- Levy of interest is mandatory. We, therefore, dismiss ground no 31 regarding levy of interest, but direct the AO in respect of ground no.32 and 33 that the interest levied under section 234A,234B and 234C be recomputed after excluding the income which is subject to TDS. So far as the issue relating to the levy of interest u/s 234B till the date of original assessment or upto the date of the assessment subsequently made after it being set aside by the appellate authorities is concerned. Section 234B(1) clearly states that the assessee shall be liable to pay simple interest @ 2% for every month or part of the month comprised in the period from 1stApril next following such financial year to the date of determination of total income u/s 143(1) or regular assessment under section 143(3) or section 144 of the Act. - No contrary decision was brought to our notice by the DR that the interest can be charged u/s 234B upto the date of passing the order in consequence of the order of the appellate authority. We, therefore, direct the AO to recompute the interest u/s 234B upto the date of original assessment passed u/s 144 dt 27.3.1995. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. In this case before us, there is a failure of computation of interest provision due to non-filing of valid return by the assessee, interest u/s 234C cannot be levied and we accordingly direct the AO not to charge interest u/s 234C. Levy of interest u/s 220(2) - Held that:- We do not find any illegality or infirmity in the order of the CIT(A) directing the AO to charge interest u/s 220(2) from the date of default of the fresh demand notice issued after the fresh assessment made in consequence of the order of the appellate authorities.
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2019 (2) TMI 1197
Slump sale u/s 50B on sale - transfer of lease hold rights - HELD THAT:- The claim of the assessee that it was a slump sale has been rightly rejected by the authorities below. Now coming to another submission of the assessee that what is transfer is the lease hold rights. The revenue has not disputed the fact that the property in question was on the basis of lease hold rights. Question as dismissed on the ground that the revenue had not preferred any appeal against the order of the Tribunal rendered in the case of Atul G. Puranik Vs. ITO [2011 (5) TMI 576 - ITAT, MUMBAI] on the question of law by following the judgement of the Hon'ble Apex Court in the case of Union of India Vs. Satish P. Shah [2000 (12) TMI 5 - SUPREME COURT]. The Ld. Counsel for the assessee has also relied upon the decision of the coordinate bench rendered in the case of Atul G. Puranik Vs. ITO (supra). The facts in that case as noted by the Tribunal that the assessee was allotted rights in the plot on 16th August, 2004 as compensation for the acquisition of lands acquired by the Special Land Acquisition Officer way back in the year 1970/1972. It is noted that the lease hold rights were for 60 years. We find that before the authorities below no such submissions were made. Merely it was stated that the A.O. ought to have referred the valuation to the Valuation Officer. However, this being the legal issue the assessee has relied upon the decision of coordinate bench. We therefore, set aside this issue to the file of the Ld. CIT(A) for his decision. Ground Nos.1 to 2.6 are partly allowed for statistical purposes. Deduction u/s 43B in respect of interest actually paid to financial institution during the year - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. CIT(A) has not rejected the claim on the ground of allowability. The same has been rejected on the basis of evidence being not produced. We find before the A.O. it was categorically stated that the assessee has paid interest to the M.P. Finance Corporation being a state entity. A.O. ought to have verified from the M.P. Finance Corporation. Under the facts disbelieving the assessee was not called for. Therefore, we direct the A.O. to delete this addition. This ground of the assessee is allowed.
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2019 (2) TMI 1196
Reopening of assessment - tangible material either from assessment record or from other source as come in the notice of AO for his reason to believe that any income has escape assessment - HELD THAT:- The expression "reason to believe" cannot have two was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of "change of opinion" is not available to him, it would still be open to him to contest the income chargeable to tax has escaped assessment. In doing so, it is further open to the assessee to challenge the reasons recorded under section 148(2) on the pronouncements. In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income "on going through the return of income" filed by the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier deprecated by the Supreme Court in Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). The "reason to believe" vis-à-vis intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147 - Decided against revenue
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2019 (2) TMI 1195
Addition u/s 68 - HELD THAT:- We are of the view that the matter requires re-consideration at the level of the A.O. Since this amount of ₹ 2,04,329/- is opening balance, therefore, the A.O. should re-decide this issue by verifying the facts of the case. We, accordingly, set aside the Orders of the authorities below and restore this ground to the file of A.O. with a direction to re-decide the issue as per Law, by giving reasonable, sufficient opportunity of being heard to the assessee. - Assessee allowed partly for statistical purposes.
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2019 (2) TMI 1194
Reopening of assessment - unexplained source of investment of assessee's half share in the impugned two properties - mistake by mentioning assessment year 2010-11 instead of 2009-10 - HELD THAT:- Notices u/s. 142(1) and notice u/s. 271(1)(b) were also issued to the assessee by mentioning the assessment year correctly. Typographical mistake in mentioning the assessment year was occurred for the first time in passing order u/s. 271(1)(b) on 26.7.2016 and notice was issued u/s. 156 for demand of ₹ 10,000/- continued the mistake by mentioning assessment year 2010-11 instead of 2009-10 and same mistake continued in further correspondences till passing the assessment order on 31.10.2016 and issuing the demand notice u/s. 156; penalty notice u/s. 271(1)(c). Such mistake in mentioning the assessment year wrongly in subsequent correspondences are nothing but mistake apparent from record with was recognized later and rectified by the AO by passing a valid order u/s. 154 of the Act on 13.01.2017. The argument of the assessee on this account fails and therefore, it was rightly held that the assessment order dated 31.10.2016 is a valid order, which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue of dispute and reject the grounds raised by the assessee. Assessee did not file any evidence in support to explain the source of investment of his half share in the impugned two properties. The assessee had not brought any evidence on record to explain such investment, the action of the AO to treat the unexplained investment made by the appellant is considered to be appropriate. It is gathered from the purchase deed of these two properties that the actual sale consideration was paid for these properties were ₹ 20,00,000/- and ₹ 10,00,000/- respectively. The value taken by the AO in assessment order as purchase consideration (unexplained investment) has been the value mentioned in the purchase deeds for the purpose of stamp duty. Such stamp duty value is for the purpose of application of provision of section 50C of the Act to compute the capital gain in the hand of the seller. The unexplained investment u/s 69 of the Act will be the actual amount paid by the assessee. In view of the same, 50% of the total consideration of ₹ 20,00,000/- and ₹ 10,00,000/- i.e ₹ 15,00,000/- and stamp duty of ₹ 4,32,300/ (Rs. 3,67,900/- and ₹ 1,64,900/- paid over such purchase amount, totaling to ₹ 19,32,300/, should be considered as unexplained investment in the hand of the assessee u/s 69. I note that the case law cited by the AR is distinguished on facts of the present case. Hence, the assessee gets relief of ₹ 33,85,200/- and the remaining addition of ₹ 19,32,300/- was rightly confirmed by the CIT(A), which does not need any interference on my part, therefore, uphold the action of the CIT(A) on the merits - decided against assessee.
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2019 (2) TMI 1193
Disallowance of expenses - assessee did not produce adequate/supporting bills/vouchers - specific defect in maintenance of books of accounts - HELD THAT:- The assessee has filed paper book in which all bills/vouchers along with replies have been filed which were filed before A.O, which indicated that assessee filed complete details before assessing officer. AO, in the assessment order, did not mention anything if the books of accounts were not produced before him. Whatever information was called for, have been filed before assessing officer, which is also noted in the assessment order. The assessing officer merely by noting that assessee did not produce adequate/supporting bills/vouchers, made adhoc additions by disallowing the above expenses. The assessing officer has not pointed-out as to which supporting bill or voucher of a particular amount have not been produced before him - no adhoc addition could be made by disallowing the expenses. Further, the profit rate of assessee in assessment year under appeal is higher as compared to earlier years and in case, the disallowances are considered, it would enhance the profit rate of the assessee exorbitantly. Thus, there was no reason for assessee to inflate the expenses. The assessing officer has not pointed-out any specific defect in maintenance of books of accounts by the assessee - Decided in favour of assessee
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2019 (2) TMI 1192
Penalty u/s. 271(1)(c) - unexplained income u/s. 69A - HELD THAT:- The matter travelled to Ld. CIT(A) and ITAT who vide their respective orders confirmed the addition and consequently, the AO imposed the penalty u/s. 271(1)(c) of the Act. The assessee has relied upon various case laws which he also relied upon before the CIT(A), but while citing the judgements and giving their head notes he has not been able to bring on record any similarity of facts between the judgment cited and the present appeal. The case of the assessee is very clear that he has no tangible explanation with regard to unexplained cash deposit which could absolve the assessee from rigour of penalty u/s. 271(1)(c) hence, CIT(A) has rightly upheld the penalty in dispute and dismissed the appeal of the assessee, which does not need any interference on my part, therefore, uphold the action of the CIT(A) in upholding the penalty in dispute and accordingly reject the grounds raised by the Assessee. - Decided against assessee.
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2019 (2) TMI 1191
Allowance of deduction u/s 80IC - manufacture of specified item - claim of deduction in the subsequent assessment year comprising of block of years in which the assessee is entitled for deduction cannot be disturbed unless the claim for initial year is disturbed - HELD THAT:- There is no dispute that the industrial unit was set up on 26.10.2006 and, therefore, the initial assessment year in which deduction u/s 80IC of the Act was claimed was assessment year 2007-08. Subsequently, the claim of deduction was also considered and allowed in assessment years 2008-09 and 2009-10. The assessment orders are placed in the paper book. In our considered opinion, the claim of deduction in the subsequent assessment year comprising of block of years in which the assessee is entitled for deduction cannot be disturbed unless the claim for initial year is disturbed. Our this view is fortified by the decision of the Hon'ble High Court of Delhi in the case of International Tractors Ltd [2017 (7) TMI 822 - DELHI HIGH COURT]. Allowing the claim of deduction u/s 80IC of the Act, the first appellate authority has considered the Board Circular issued by the Government of India, Ministry of Finance, Department of Revenue in which the Board has considered the classification of aluminium foil laminated on both sides with plastic films would be under Chapter heading 7607 instead of Chapter heading 3920. - Decided against revenue
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2019 (2) TMI 1190
Allowable business expenditure u/s 37 - expenses of professional fees, security charges, travelling expenses, etc. against the meagre director sitting fees - the assessee’s claim is that to earn the said fee, he had to do liasoning with various government authorities, and the expenses have been incurred genuinely - HELD THAT:- By no stretch of imagination, it can be accepted that the assessee has incurred these expenditure for earning the director sitting fees. The authorities below are quite correct in arriving at a conclusion that there is no nexus between this expenditure incurred and the meagre income shown from other sources. We find that the alternative submissions of the assessee deserve consideration as the assessee has earned remuneration which is assessable as business income. These expenses can be considered u/s. 37(1) as business expenses after factual examination of the nexus with earning the business income. In this regard, the ld. Counsel of the assessee has agreed that the matter may be remitted to the file of the A.O. to examine this aspect. We, accordingly, accede to this request. DR's objection to the alternative request being additional ground not raised earlier cannot be entertained. As it was expounded by the Hon'ble Apex Court in the case of Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME COURT] that the ITAT has powers to admit the grounds raised otherwise than by filing the original return. Accordingly, the alternative issue raised stand remitted to the A.O.
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2019 (2) TMI 1189
Penalty u/s. 271(1)(c) - disallowance u/s 57(iii) - scrutiny assessment - statutory notices u/s 143(2) and 142(1) calling for details - assessee has filed a revised return during the course of assessment - HELD THAT:- Explanation of the assessee is that the assessee has noted certain mistakes in the computation of income in the return filed and since the return was belated one, it could not file the revised return. During the course of assessment in the first submission before the detection by the A.O., the assessee submitted the revised return. These submissions have not been disputed by the A.O., rather he has said that the assessee could have submitted the revised return at the TAPAL of the A.O. We find that the facts of the case clearly indicate the bonafide of the assessee. It is settled that unless the conduct of the assessee is contumacious, penalty cannot be levied. See Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] - justification in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute.. Thus we delete the penalty levied in this case. - Decided in favour of assessee.
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2019 (2) TMI 1156
Notice issued in the name of the dead person - validity of assessment - curable defect 292B - Held that:- Issuing of notice under Section 143(2) of the Act which alone gives jurisdiction to the Assessing Officer to proceed with scrutiny assessment under Section 143(3) of the Act. The contention of the Revenue that in any view of the matter, Section 292B of the Act would apply to the facts of this case is not acceptable. A notice issued u/s 143(2) which gives jurisdiction to complete the assessment having been issued in the name of the dead person is non-est in law as it is not the saved by Section 292B of the Act. The issue of a notice under Section 143(2) of the Act so as to take up the assessment for scrutiny is not a procedural but a substantive provision. Therefore, where a notice is issued in the name of a wrong person, there would be no issuing of notice as required under the Act. In such cases, as in the case of Section 148 of the Act, the issuing of a notice in the name of the wrong person is not a procedural and / or clerical error. Therefore, being a substantive defect, the notice cannot be saved by Section 292B of the Act. - Decided in favour of assessee.
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Customs
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2019 (2) TMI 1188
Amendment in the IGM - supply of a dry raw cashew nuts - Circular No.14/17-Customs dated 11.04.2017 - Held that:- The responsibility of amendment in the IGM rests solely with the Shipping Line/ Agent as they file IGM with Customs under Section 30 of Customs Act, 1962 - this Court directs the second respondent to forthwith apply for amendment in the IGM and other documents. Petition allowed - decided in favor of petitioner.
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2019 (2) TMI 1187
Amendment in shipping bills - Benefit under Merchandise Exports from India Scheme (MEIS) - petitioner inadvertently opted for “No” instead of “Yes” in the shipping bills - Corrections to be made is denied on the ground that now the EDI system is being followed and not manual system is in place - Held that:- Identical issue decided in the case of SAINT GOBAIN INDIA PVT. LTD. VERSUS UNION OF INDIA [2018 (11) TMI 536 - KERALA HIGH COURT], where it was held that petitioner shall produce the said NOC before the 4th respondent and seek the benefits from the 4th respondent. In the present case also, the second respondent can be directed to issue N.O.C. to enable the petitioner to avail the benefit from the third respondent - petition allowed.
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2019 (2) TMI 1186
100% EOU - Benefit of concessional rate of duty as per N/N. 23/2003-CE dated 31.3.2003 - Valuation of DTA Clearances - precision automotive components, ancillaries, turbo chargers and parts thereof, casting and tools, dies and moulds, jigs and fixtures - similar goods - It appeared to the Department that value of DTA clearances of bearing housing machined (parts of turbo charger) is more than the prescribed limit of 90% of the FOB value of exports - N/N. 23/2003-CE dated 31.3.2003 vide Sl. No. 3. Held that:- Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. The description of goods in the Green card does not differentiate or specify goods on the basis of Customs Tariff. It merely treats them belonging to a class. Bearing machines are considered by department as part of Turbo Charger which are parts of automobile, then Precision Automotive Components also being part of Automobiles should fall in the same class, since they are engaged in manufacture and export of various parts of automobiles as stated in the Green Card. The appellant has cleared in DTA Bearing Housing only. Precision Automotive Component was not cleared in DTA. In para 6.8 what is stated is that when more than one product is exported, such unit can clear in DTA upto 90% of value of such specified goods provided the total DTA sale does not exceed 50% FOB value of exports of the unit. The appellant have sold 90% FOB of value of export of Bearing Housing in DTA and has not exceeded 50% of FOB value of the unit since there is no DTA sale of Precision Automotive Component. The condition is therefore fully satisfied. The denial of concessional rate of duty as per the notification is unjustified. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1185
Penalty u/s 114 of CA - whether there was proposal made in the show-cause notice for imposition of penalty under Section 114? - Held that:- The proposals made against the respondents as reproduced in Order-in-Original clearly shows that there was no proposal made for penalty under Section 114. Since no penalty was proposed under Section 114, Commissioner could not have imposed penalty under that Section. The Commissioner has imposed penalty of ₹ 70,00,000/- on the respondents under Section 114AA - Since penalty has already been imposed under Section 114AA, there is no merit in proposed penalty under Section 114 at this stage - Since appeal filed by the Revenue travels beyond the scope of show-cause notice and the adjudication order, the same is not maintainable and hence, dismissed.
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2019 (2) TMI 1184
Refund of SAD - N/N. 102/2007 Customs dated 14.09.2007 - only ground of rejection is that the Truck No. mentioned in the requisite documents is not tallying with the truck No. mentioned on the invoice/ receipt. The plea of the appellant for same to be a clerical error has not been considered by the adjudicating authority - Held that:- Perusal of Form VAT 38 shows that the invoice Nos. i.e. 192-194 and 196 are mentioned in the VAT 38 challan. The said mention is sufficient to hold that the VAT Challans are with respect to such Truck Nos. as are mentioned in the invoice bearing aforesaid Nos. Now, perusing the CA Certificate it is clear that not only the Bill of entry No. but the invoice No. as well as the date of the payments made are mentioned. Thus three of these documents when read together are sufficient to prove that three of these documents speak about such transaction and such details as are mentioned in the invoices 192-194 and 196. Once, this is the fact the difference in the truck No. on VAT 38 is nothing beyond merely a typographical error. The adjudicating authority has committed an error while not looking into the CA Certificate as the corroboration to the invoices as well as the VAT 38 challans. In fact, no other document was required. The finding that, the documents evidencing the same are not produced is therefore opined to be an outcome of mere presumption on part of the Department - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (2) TMI 1183
Oppression and mismanagement - Holding BOD meetings outside India - Company incurred heavy expenses for shifting the Office - HELD THAT:- Nothing is shown that there is any restriction on the place where Board of Directors should hold their meetings. Respondents has rightly pointed out even earlier meetings which were being held in Malaysia and which were held without any grievances. The disputes now being raised regarding travelling and other allowances, we find, are only for the purpose of raising grievances. The point, which is pinching the original Petitioner, is the termination of the agreement and rest of the disputes, it appears to us, are being raised to drag the matter to the NCLT. Even regarding the meetings dated 29.12.2010 and 31.03.2011, we have already referred to Notices being sent to the representatives of the original Petitioner. The pleadings of the original Petitioner itself showed receipt of Notices and added that the Petitioner had informed its inability to attend the meeting on 29.12.2010 and had sent its comments/submissions. Even regarding the Meetings of 31.03.2011, the Petitioner had informed by communication dated 24.03.2011 claiming that there was no need to hold the meeting. As regards the letter of protest dated 14.06.2011, original Respondent No.7 accepted receipt of letter dated 06.06.2011 proposing to hold meeting on 29.06.2011 in Malaysia. This Respondent claimed that he was travelling abroad and could not attend the Meeting at Malaysia and sought leave of absence. He noted that he could participate by teleconferencing and wanted to know the procedure. He wanted the Company to inform the policy regarding payment of to and fro air fare, hotel and other dues, etc. Alternately, he suggested holding of the Meeting at Hyderabad. With regard to the Agenda which had been proposed, he offered his comments Agenda-wise. With regard to the Agenda No.5, he mentioned that he was interested as Managing Director of “Starlite Global Enterprises (India) Ltd.” He stated that he should not comment with regard to the portion of material events and commitment in the Directors Report. Thus, he had sought leave of absence with so many other queries being raised. Going through the material, we do not find that there was anything procedural which could be termed as illegal or in the facts of the matter of such a nature which could be called oppressive. No oppression and mismanagement is proved. We do not find any substance in the arguments raised by the Counsel for the Appellants in this Appeal.
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2019 (2) TMI 1182
Time limitation for filing appeal - Oppression and mismanagement - the appellant has claimed that he had been proceeded against ex parte and he came to know of the impugned order on 2.7.2018 - Held that:- Under Section 421 of the Companies Act, 2013, (“Act” in brief), the appeal has to be filed within 45 days from the date on which the copy of the order of the Tribunal is made available to the person aggrieved. The Proviso to sub-section (3) states that the Tribunal may entertain an appeal after the expiry of the said period of forty five days from the date aforesaid, but within a further period not exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period. Proviso of Section 421 of the Act are quite clear. After the first 45 days which is period given to file the appeal, the next 45 days would require sufficient cause to be shown. This Appellate tribunal has no power to condone beyond this second slab of time. In the present matter the appeal has been presented much beyond the period of 90 days and I am not required to go into the question whether there was sufficient cause for delay. The appeal is clearly time barred and is required to be dismissed on this ground itself. Also, no prima facie case is made out by the appellant that he has good case and grounds for setting aside ex parte orders. The appeal is dismissed on the ground of same being time barred.
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Service Tax
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2019 (2) TMI 1181
Reimbursement/refund the service tax paid by the petitioner - N/N. 25 of 2012 dated 20.06.2012 - Held that:- Since no counter affidavit is filed to support the submission by ‘the Corporation’ and a representation in this regard is on record at Annexure-5 dated 12.10.2017 whereunder the petitioner placing reliance on Clause 35 of the general conditions of contract has sought for reimbursement of service tax amount, we would direct the Managing Director of the ‘Corporation’ to dispose of the representation by a speaking order to be passed within three months from receipt/production of a copy of this order - petition disposed off.
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2019 (2) TMI 1180
Maintainability of petition - alternative remedy of statutory appeal - post-decisional SCN - time limitation of SCN u/s 73(2) of the Finance Act - Exemption notification dated 24.05.2010 and 20.06.2012 not considered - Held that:- The statutory period for filing such appeal has expired while the matter is pending consideration before this Court. 4 weeks time is granted to the assessee to exhaust such remedy so available and should any appeal be filed within 4 weeks from today accompanied with the petition for condonation of delay, the appellate authority shall consider the same on its own merits and dispose of the same in accordance with law without being prejudiced by the outcome of the present proceeding and bearing in mind the pendency of the matter before the High Court - petition disposed off.
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2019 (2) TMI 1179
Classification of services - Manpower Recruitment and supply services or not - charges received in relation to the supply of labour to M/s. Caltex Gas India (P) Ltd. - Held that:- The work is done as per the work orders issued by M/s. Caltex Gas India (P) Ltd. So also the payment is made in respect of each work order realized by M/s. Caltex Gas India (P) Ltd. from time to time. There is no whisper in the agreement that the payment has to be based on the number of persons or the man hours engaged for doing the work - Further, the workers who are taken by the appellant for executing the work order are under the control of the appellant and not under M/s. Caltex Gas India (P) Ltd. The agreement is very much evident to establish that the nature of activity does not fall within the definition of manpower recruitment and supply service - demand set aside - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1178
SEZ unit - Refund of service tax - rejection on the ground that once the services are exempted by Notification No.9/2009 as amended by Notification No.15/2009-ST whereby the exemption claimed by developer or units of SEZ shall be provided by way of refund except for services consumed wholly within the SEZ - Held that:- Identical issue decided in the case of Intas Pharma Ltd. Vs CST Ahmedabad [2013 (7) TMI 703 - CESTAT AHMEDABAD], where it was held that any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ - refund allowed - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1177
Classification of services - tyre re-trading activity - whether covered under the category of management, maintenance or repair service or not? - consideration for charge of service tax - benefit of N/N. 12/2003 - Held that:- The activity carried out by the appellant is in the nature of retreading of tyres. Evidently, such activity is in the nature of repair and maintenance of tyres. The activity includes use of certain materials in the process of retreading. The appellant is found to charge a consolidated invoice for recovery of the charges from the customer. They were found to have imposed a stamp on the invoice indicating the split up of the overall invoice value into the material and spares cost as well as labour charge and have discharged the service tax liability only to the extent of labour charges. The only reason for denying the benefit of the Notification is that the documentary proof specifically indicating the value of the said goods and services was not available on the part of the appellant - In this connection an identical activity has been considered by the Hon’ble Supreme Court in the case of Safety Re-trading Co. Pvt. Ltd. [2017 (1) TMI 1110 - SUPREME COURT], where it was held that in terms of Section 67 of the Finance Act, 1994, the valuation of taxable services specifically excludes the cost of parts or other material, if any, sold to the customer while providing maintenance or repair service. The Apex Court has further held that this will include the deemed sale of material consumed in providing such service. Revenue has proceeded to deny the benefit of the Notification on the presumption that the same has been done after issuance of the invoice for manipulating the facts by showing lesser amount than shown in the invoice. No further investigation appears to have been done to substantiate the above presumption. There is no justification for denying the benefit of N/N. 12/2003 - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1176
Construction services - Commercial or Industrial Construction - Construction of Residential Complex Service - benefit of exemption under Notification No.1/06-ST dated 01.03.2006 - period 2006-07 to 2010-11 - Held that:- The appellant has admittedly provided construction services. After perusal of some of the contracts whose copies were submitted by the appellant, the adjudicating authority himself has recorded the conclusion that the services provided by the appellant will be classifiable under the category of Works Contract Service w.e.f. 01.06.2007 - In view of the decision of the Hon’ble Apex Court in the case of L & T [2015 (8) TMI 749 - SUPREME COURT], the demand of service tax for the period prior to 01.06.2007 is liable to be set aside. Demand beyond the normal period of limitation under section 73 of the Finance Act - Held that:- It is on record that the appellant was already registered with the Department for providing various services. They have also been filing ST-3 returns periodically in which they have declared the value of services provided and the fact that they were paying the Service tax under the category of commercial or industrial construction services, after availing the benefit of the Notification No.01/2006. The Department appears to have taken the view that the activities are more appropriately classifiable under the category of Works Contract Service, only during the course of audit of the records - there is no ground for alleging suppression - the demand for the period beyond the normal time limit is set aside on the ground of time bar. Benefit of Works Contract Service (Composition Scheme) - Held that:- The non-exercise of the option for payment of tax under the Composition Scheme cannot be held as a reason to deny the benefit of the competition scheme since it is in the form of only a procedural requirement - the appellant will be entitled to the Composition Scheme subject to fulfilment of the other conditions - the service tax liability of the appellant is required to be re-calculated after extending the benefit of Composition Scheme and after allowing them the cum-duty benefit. The demand for service tax beyond the normal period of limitation set aside - For the demand of Service Tax falling within the normal time limit, the services, already classified by the adjudicating authority under WCS, will be entitled to the benefit of the Composition Scheme. The demand, if any, is to be re-calculated with cum-tax benefit and the appellant will be entitled to the consequential benefit if any - appeal allowed by way of remand.
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2019 (2) TMI 1175
Valuation - services of providing security personnels to M/s BHEL, Haridwar - inclusion of cost of accommodation facility as provided by BHEL to CISF(the service provider) in assessable value - whether the free accommodation provided by the service recipient to the security personnels shall be consideration to be included in the gross value? - Extended period of limitation - Government undertaking / PSU. Held that:- The consideration received against providing any service, i.e. as per explanation Section 67, is something which include any amount payable for taxable services provided or to be provided. The bare reading makes it clear that in case any amount is payable qua to CISF the accommodation being provided to the security personnels that it shall be the consideration. If it is consideration, then only Rule 3 Value of Determination rules will come into picture - there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value which has to be taxed under Section 67 of the Act. Time Limitation - Held that:- The period of demand herein is w.e.f. April 2009 to June 2012. SCN is issued on 09.09.2014. It is clear that the entire period of demand is beyond the normal period of one year. The service provider herein is Government undertaking. Service recipient is also a public sector undertaking. There cannot be a single good reason for either of the two to have an intent to evade the tax. there is otherwise no evidence by the Department to prove any positive act on part of the service provider which may amount as mensrea on the part of the provider to evade tax - The Department had no occasion to provisio to Section 73 of the Finance Act, 1994 for invoking the extended period of limitation - SCN is hit by the principle of limitation. Appeal dismissed - decided against appellant.
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Central Excise
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2019 (2) TMI 1174
Rectification of Mistake - Section 35(2) of Central Excise Act read with Rule 41 of the CESTAT Procedure Rules, 1982 - CENVAT Credit - maintenance of separate records - sub-rule(2) of Rule 6 of the Cenvat Credit Rules, 2004 - Held that:- The Appellants have only reverted or changed to compliance as per Rule 6(2) of Cenvat Credit Rules, 2004 by maintaining separate accounts. Explanation I under sub-Rule 3 restricts opting out of one of the options availed, out of the options, and availing the other option, within sub-Rule 3 of Rule 6 - Further, it has been clarified by the Hon'ble Supreme Court in S. Sundaram Pillai’s case [1985 (1) TMI 306 - SUPREME COURT OF INDIA], that an Explanation cannot override the main provision, and is for a limited purpose to clarify, or fill in any gap, or provide additional support to the dominant object of Rule/Section. There have been a mistake of law in the final order dated 18.04.2018, leading to miscarriage of justice - ROM application allowed.
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2019 (2) TMI 1173
CENVAT Credit - inputs or capital goods - grinding wheels, cutting tools, inserts, etc. - refractory or refractory material - case of Revenue is that the goods are capital goods and not inputs and hence appellant is entitled to only 50% credit in the first year - Held that:- It is observed from the SCN as well as the Order under challenge that there is no denial to the aforesaid fact that three of these items are used by the appellant in the machines manufacturing the final product. As per Cenvat Credit Rules, capital goods, as well as input are defined under Rule 2(a) and 2(k) respectively. Perusal of both these provisions makes it clear that both the terms are relative to the use they are put to. No doubt, grinding wheels are specifically mentioned in the definition of capital goods to be known as capital goods but they can acquire the relative character of being the input. The Hon’ble Apex Court in the case of Collector of Central Excise and others Vs. Solaris Chemical Ltd. [2007 (7) TMI 2 - SUPREME COURT OF INDIA] has held that when the article is captively consumed in the manner that without the use of the said article it was not possible to manufacture the final product. The article will come within the ambit of expression, “use in relation to the manufacture” occurring in Rule 57a of Central Excise Rules, 1944 - The Hon’ble Apex Court has further held that any operation in the course of manufacture if so integrally connected with the operation involved in the emergence of manufactured goods it would come within the term of manufacture and the utilisation of the articles for production of final products will clothe it with the character of being an input which shall be available to cenvat in accordance of Rule 57(a) - thus, three of the goods are held as inputs as such being eligible for the cenvat credit with the 100% utilisation thereof in the same financial year. Hence, the demand with respect to these articles for the interest and the penalty is held not sustainable. Imposition of penalty - Refractory or refractory material - Held that:- The SCN dated 17.09.2010 should not have been issued as being beyond the date of deposit of the proposed liability of the interest. This perusal makes it clear that adjudicating authority has failed to observe the mandate of the statute for no adjudication where the payment has been made even prior the issuance of SCN. Once the payment stands made, the question of any malafide intent to evade the duty has no more relevance. Thus, the Order of imposition of penalty in Appeal No. E/53182/2018 is not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1172
CENVAT Credit - fake invoices - no physical delivery of goods - demand based on third party evidence - appellant’s specific submission that due to the purchase being made on FOR basis that no freight was paid by the appellant and no GR was generated as such the said document is not available with them - Held that:- The Commissioner(Appeals) is still of the opinion that the requisite document as that of the purchase of the raw material by the appellant from M/s UAPL has not been produced on record. Rather perusal of the order makes it clear that the Department has acknowledged about appellant making payment to M/s UAPL against the aforesaid invoices. The documents on record shows that the inputs as received by appellant were first purchased by M/s UAPL from M/s Moral Alloys based at Bhiwadi and the GR in that respect were also produced on record. The Order under challenge has ignored those GRs. There is nothing apparent in the Order about the vehicle nos. mentioned on the said GRs - There is no other evidence on record to support the finding that the vehicle nos. as mentioned in the invoices issued by Shri Amit Gupta were LPG tankers, JCP Machines, auto richshaw rather perusal of the invoices issued by Shri Amit Gupta shows that no vehicle No. is mentioned on those invoices. The findings are based upon the third party evidence without even giving the opportunity to the appellant to confront the evidence recovered from a third party, but against the appellant. The opportunity of cross examination is given under the law as a means of fair trial because it is cross examination only vide which the party gets the opportunity to confront the evidence produced against it. In absence of such opportunity specifically the denial thereof is sufficient to hold that opportunity of fair trial has been denied to the appellant - finding of Commissioner(Appeals) holding that there are clinching evidences to prove the alleged fault of the appellant and that there is no evidence of the appellant in support of defence are actually the findings based on mere presumptions and surmises. Invocation of sub rule 4 of Rule 7 of Cenvat Credit Rules, 2002 - Held that:- The appellant has submitted enough document to discharge the liability as fixed under the above said Rule. As already observed that the findings of Commissioner(Appeals) are in ignorance of the documentary evidence, there arises no reason for invoking the said Rule especially when the demand against the appellant has been confirmed merely on the basis of the oral statement of a third party which received no corroboration from any document as received by the Department from appellant premises. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1171
Time Limitation - Rebate claim - sanction of amount of ₹ 79,146/- by way of credit in Cenvat Credit account is objected - Held that:- The Order-in-Original was announced on 22.09.2017 and appeal has been filed with a delay of more than 5 months over and above, the period of 90 days. Commissioner (Appeals) in para 7 of the order under challenge has specifically observed that the original order was dispatched on the date of order itself to the appellant - There is no other evidence as could be produced by the appellant about receiving the said order on 2nd April 2018 i.e. after a delay of 8 months. In the absence of any evidence to said effect and in absence of any other reasonable explanation by the appellant even in the grounds of appeal, there is no infirmity in the order under challenge - appeal dismissed - decided against appellant.
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2019 (2) TMI 1170
Excisability/marketability - waste - waste of base cream cleared without consideration - Held that:- It is not the case of the Revenue that the said waste is cleared for a consideration, therefore, no sale is involved. Base cream is not packed in tubes, as in the case of normal toothpaste tubes sold, it cannot be held that they are marketable as in respect of such products packing is am essential requirement to make it marketable. The waste cleared by the appellants does not even satisfy the test of saleability. Therefore, even when the goods are held to be excisable for the reason that they have been manufactured in the factory, they do not assume the character of being goods which can be marketable and saleable. Dumping of waste cannot be equated to clearance of excisable goods. Demand set aside - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1169
Refund claim - certain discounts allowed on the goods on clearance from the depot - contention of the department was that the appellant did not provide the details of the discounts passed on and that they could not produce evidence/documents to indicate the quantity of discounts passed on - unjust enrichment - Held that:- On perusal of the invoices, it is seen that the duty has been paid at the time of clearance from the factory. The discounts are pre-notified to their customers and have been passed on as evidenced from the invoice and accounts. The certificates given by the Chartered Accountant, who also indicate the discounts have been passed on and wherever duty was liable to be refunded, the same has been shown as receivable in the books of accounts - the appellants have adhered to the requirements of provisions related to valuation of goods under Central Excise Act, 1944 and made there under. Refund cannot be denied on this ground - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1168
Penalty u/r 26 of CER - Clandestine removal - only paper transaction and no physical dealing of the goods - Held that:- As per the facts of the case it is established that the supplier M/s. Hema Exports, under the guise of supplying goods to 100% EOU i.e. the present appellants, diverted the goods in the open market with clear intention to evade payment of duty. The diversion of the goods in the open market could not have been possible without the involvement of present appellants.As per the facts of the case it is established that the supplier M/s. Hema Exports, under the guise of supplying goods to 100% EOU i.e. the present appellants, diverted the goods in the open market with clear intention to evade payment of duty. The diversion of the goods in the open market could not have been possible without the involvement of present appellants. From Rule 26, it is clear that, if any person in any manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or law shall be liable to penalty - In the present case, the appellants were very much involved in dealing with the goods in diverting by M/s. Hema Exports in the open market. Therefore, even though the goods were not dealt with physically but there is no dispute that the appellants were involved in dealing with the goods in a manner by which the supplier was facilitated in diversion of goods in open market - thus, the ingredients of Rule 26 are existing in the offence committed by the appellants. Penalty on other appellants, who are partners of a partnership firm - Held that:- Once the penalty was imposed on a partnership firm, no separate penalty should be imposed on the partners separately for the reason that the partnership firm itself is consisting of partners - penalty on partners set aside. Appeal allowed in part.
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2019 (2) TMI 1167
Excisability - intermediate goods - clinkers used in the manufacture of cement - benefit of N/N. 67/95-CE claimed - demand is on the ground that cleared to SEZ is not export, hence duty is to be paid on clinkers - Held that:- On identical issue in respect of the very same appellant, for the earlier period COMMISSIONER OF CENTRAL EXCISE, TIRUCHIRAPALLI VERSUS MADRAS CEMENTS LTD. [2017 (12) TMI 1664 - CESTAT CHENNAI], it was held that appellants are eligible for exemption under Notification 67/95-CE on clinker captively consumed for manufacture of cement cleared to SEZ units/developers without payment of duty for both the periods prior to and after the amendment of SEZ Act - appeal dismissed - decided against appellant.
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2019 (2) TMI 1166
Classification of goods - Gloves used in ‘Wicket Keeping’ and ‘Batting’ in the game of cricket - Held that:- The issue is no more res-integra and is settled by the decision of this Tribunal in the case of M/s Sanspareils Greelands Pvt. Ltd. V/s CCE & ST, Meerut [2016 (9) TMI 1230 - CESTAT ALLAHABAD], where in this Tribunal had held that in view of classification of Gloves by Central Board of Excise & Customs through notification issued for the purpose of fixing drawback rate, the same goods were classified under Chapter 95 and therefore, they are classifiable under Chapter 95 and that Revenue could not change its stand - appeal dismissed - decided against Revenue.
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2019 (2) TMI 1165
Valuation - processed fabric - inclusion of the shrinkage factor @ 4.2% while determining the assessable value - Held that:- From the referred paras of the order of adjudicating authority the fallacy in reasoning adopted is quite evident - If the scheme as laid down by the trade Notice No 65/2002 read with Trade Notice No 46/2002 is read in proper perspective then it can be seen that scheme of valuation as per the said two trade notices and trade notice of 31.03.2003 are identical. From the perusal of the said trade notice, it is quite evident that what is being clarified and determined there in is the assessable value of processed fabric. If that be so the assessable value, so determined should be multiplied by the quantity of processed fabric cleared to arrive at the total assessable value and duty determined thereon. From Annexure B, to the show cause notice, it is quite evident that duty has been not demanded by enhancing the assessable value of the processed fabric, but is demanded on the value of grey fabric by increasing the quantity of grey fabric. There is no dispute about the fact that duty has been paid by the appellants after determining the assessable value as per trade notice of 31.03.2003. When the total quantum of the grey fabric received has been taken into account while determining the landed cost of grey fabric then the shrinkage factor is part of the total value, and there cannot be further addition to the same. The Adjudicating authority have fallen in error to the extent of addition of the “shrinkage factor” over and above the landed cost of grey fabric as received by the appellants - demand set aside - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 1164
Method of Valuation - rule 11 or rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or by resorting to Rule 8 of the said Rules? - goods manufactured and capitvely consumed - Held that:- The wording of said Rule 11 of Valuation Rules, 2000 indicates that if the value of any excisable goods cannot be determined under Rules up to Rule 10A then the value is to be determined using reasonable means consistent with the principles and general provisions of Section 4. For the circumstances covered in the present case there is provision under Rule 8 of said Valuation Rules, 2000, which reads “Rule 8” where the whole or part of the goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of said goods i.e. consumed shall be 110% of the cost of production or manufacture of said goods. Since express provision covering the circumstances being available under said Rule 8 of Valuation Rules, 2000, there was no case to resort the provisions of said Rule 11 of Valuation Rules, 2000. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (2) TMI 1163
Computation of Compounding of tax - KVAT Act - death of proprietor - Transfer of registration of the proprietor also applied - case of petitioner is that there is unreasonable delay insofar as seeking for impleadment, setting aside abatement - Held that:- The Tribunal had noticed that the transfer of registration was applied for earlier on 22.05.2017. The fact that the transfer of registration was applied for before the Assessing Officer, would definitely enable the Department to file an impleading petition. But, the person who applied for transfer of registration in his name also had a duty to apprise the Tribunal of the death of his predecessor and he having stepped into the shoes of his father - In fact, the Tribunal has specifically noticed that it was apprised of the death of the proprietor of the firm on 19.10.2017. The Counsel for the firm had informed the Tribunal about the death of the proprietor. Within six weeks there was an application for impleadment filed. The delay insofar as setting aside the abatement is only for reason of the expiry of 90 days without an application for impleadment. There is no infirmity in the order of the Tribunal to be interfered with in the above original petition - petition disposed off.
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2019 (2) TMI 1162
Validity of assessment order - imposition of tax and penalty - Form WW - the petitioners did not file the Auditor Statement in the prescribed format in Form WW within time - Held that:- The delay in filing the Auditor Report cannot be the reason to deny the benefit to the petitioners out of such report - reliance placed in the case of M/S. POLLACHI MOBILES VERSUS THE COMMERCIAL TAX OFFICER [2017 (6) TMI 1282 - MADRAS HIGH COURT], where it was held that The impugned order of assessment is set aside and the matter is remitted back to the Assessing Authority for considering the Form WW submitted by the petitioner and pass a fresh order of assessment, after giving due opportunity of hearing to the petitioner. The matter is remitted back to the Assessing Officer for considering Form WW submitted by the petitioners and pass fresh orders of assessment after giving due opportunity of personal hearing to the petitioners - Petition allowed by way of remand.
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2019 (2) TMI 1161
Validity of re-assessment order - recovery proceedings - KVAT Act - It is the contention of the petitioner that no reasonable opportunity was provided to the petitioner, before passing the re-assessment order impugned herein - principles of natural justice - Held that:- It is apparent that the petitioner was duly served with the notice by Muddam on 20.11.2017. As there was no response, an endorsement dated 22.02.2018 was issued and the same was duly served on the assessee by Muddam on 23.02.2018. Despite the same, the petitioner has not responded to the proposition notice dated 10.10.2017. Hence, it cannot be held that no reasonable opportunity was provided to the petitioner, before passing of the re-assessment order on 12.03.2018 - Writ Petition is liable to be dismissed with liberty to the petitioner to file statutory appeal before the appellate authority in accordance with law.
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2019 (2) TMI 1160
Reopening of assessment - change of opinion - Classification of cotton coated fabrics - TNGST Act - whether the assessment for the year 2000-01 under the provisions of the TNGST Act, dated 21.03.2002, could have been reopened? - Held that:- There was no valid ground to reopen the assessment. In fact, reading of the order shows that the Assessing Officer himself is not clear as to on what reason, he reopened the assessment. Therefore, we can safely conclude that the reopening of the assessment was a clear case of change of opinion. For the earlier assessment years and the subsequent assessment years, viz., 1999-2000, 2001-02 and 2002-03, exemption has been granted in respect of the same type of transaction as is being done by the assessee. Thus, the Tribunal erroneously reversed the order passed by the first appellate authority, dated 08.04.2004. Tax case revision is allowed.
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2019 (2) TMI 1159
Imposition of luxury tax - Validity of assessment order - imposition of penalty - case of appellant is that they do not rent out any rooms for accommodation, as is done in a hotel. They would not come under the term "luxury" for reason of there being no rooms for rent - Held that:- In the present case, the definition clause indicates very specifically and categorically as to what a luxury taxable under the provisions of the Act is. The "luxury" as provided in the various establishments enumerated in the definition clause, refers to "accommodation for residence or use" and "other amenities and services provided thereon". Hence, the accommodation could be for residence or for use - The charging section also speaks of "accommodation for residence or use", wherein the use is for conducting functions whether public or private. The computation provision speaks of the charges for accommodation, amenities and services and the word "accommodation" includes, the "accommodation for residence" and "accommodation for use". On the renting out of the hall for a public or a private function, essentially the accommodation provided is for use of the hall, for a consideration. Admittedly, the renting out is for a charge and for the period it is rented out, the rentee could use it for the function for which it has been rented out as per the agreement between the two parties. In such circumstances, it can be said that, the computation provision also provides for a determination of the tax, which is on the charges for accommodation taken by the appellants from the person, who uses the hall for a public or a private function. Appeal dismissed - decided against appellant.
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Indian Laws
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2019 (2) TMI 1158
Grant of interim bail - bail sought on the ground of illness of his wife - seizure of Heroin - case of the prosecution is that an information was received that one parcel booked with DHL Express Limited from Delhi to Spain was containing drugs - Held that:- Fresh status report has been filed with regard to the family members of the wife of the petitioner. Though the status report indicates that there are family members, however, learned counsel appearing for the respondent submits that as per his instructions they are not residing with her - the petitioner is entitled to interim bail for a period of four weeks. The petitioner shall be released on interim bail for a period of four weeks from the date of his release - petition allowed.
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2019 (2) TMI 1157
Smuggling - cocaine - Section 21(b) of NDPS Act - Held that:- Nominal Roll dated 02.05.2018 reflects that he is not a previous convict and his overall jail conduct is satisfactory. He has already undergone two years and fifteen days incarceration as on 01.05.2018 - the period already undergone by the appellant in this case is taken as a substantive sentence. Other terms and conditions of the sentence order are left undisturbed. The appellant shall deposit the fine as imposed with the Trial Court. On release, the appellant shall be handed over to FRRO for immediate deportation. Petition disposed off.
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