TMI Tax Updates - e-Newsletter
February 28, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Rate of IGST - Imported of specified Equipment for delivery as OEM - Applicant cannot claim exemption from tax liability of another person

  ---

• Input Tax credit (ITC) for Services availed in relation to plantation and gardening within the plant area including mining area allowed

  ---

Articles

1. COMPENSATORY AFFORESTATION FUND – PART II

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. NITI Aayog’s Atal Innovation Mission partners with Adobe to enhance creativity in ATL Schools

2. NITI's Office for New India - Towards Inclusive, Sustainable, Transparent, Paperless processes Transforming India

3. Commerce Ministers of India and Italy Co-Chair 20th Session of India-Italy JCEC

Notifications

Customs

1. 12/2019 - dated 26-2-2019 - ADD

Seeks to impose definitive anti-dumping duty on "Textured Tempered Coated and Uncoated Glass" originating in or exported from Malaysia

2. 06/2019 - dated 26-2-2019 - Cus

Seeks to further amend notification No. 50/2017-customs dated 30th June 2017 to postpone the implementation of increased customs duty on specified imports originating in USA from 2nd March, 2019 to 1st April, 2019

3. 14/2019 - dated 26-2-2019 - Cus (NT)

Administrative changes in the jurisdiction of Chief Commissioner Customs Zone II Mumbai.

FEMA

4. FEMA 6(R)/(1)/2019-RB - G.S.R. 151(E) - dated 26-2-2019 - FEMA

Foreign Exchange Management (Export and import of Currency) (Amendment) Regulations, 2019

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/15/2019/ITA.ll - dated 27-2-2019

Extension of due date for filing of ITRs/Audit Report for the A.Y. 2018-19 in respect of Kerala Region

DGFT

2. 76/2015-2020 - dated 26-2-2019

Amendments in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS)

Highlights / Catch Notes

GST

• Input Tax Credit Allowed for Plantation and Gardening Services in Plant Areas, Including Mining Sites and Business Premises.

  Case-Laws - AAAR : Input Tax credit (ITC) - Services availed in relation to plantation and gardening within the plant area including mining area and the premises of other business establishments - such activities are integral to the business activity of the assessee - credit allowed.
  Visit to Get Source

  ---

• Input Tax Credit Denied for Employee Housing Costs: No ITC on Goods/Services for Maintenance of Residential Accommodation.

  Case-Laws - AAAR : Input Tax credit (ITC) - provision of housing to its employees by the assessee is nothing but a perquisite - ITC shall not be allowed in respect of tax paid on goods and services procured by it for management, repair, renovation, alteration or maintenance services pertaining to residential accommodation for its employees in township/colony.
  Visit to Get Source

  ---

• Clarification: IGST Rate on Imported Equipment for Eligible Institutions; Exemption Not Claimable by Third Parties.

  Case-Laws - AAR : Rate of IGST - Imported of specified Equipments delivered to the Eligible Institutions - The Applicant cannot claim exemption from the liability of another taxable person.
  Visit to Get Source

  ---

• Gudakhu Classified Under Tariff Item 2403 99 90 as "Other" Based on Composition, Character, and Use.

  Case-Laws - AAR : Classification of goods - Gudakhu - it can be classified and rightly so under the residual tariff item 2403 99 90 - other’ of the said Chapter Heading because of its composition, character and use.
  Visit to Get Source

  ---

Income Tax

• Deadline Extended for Filing Income Tax Returns and Audit Reports for Assessment Year 2018-19 in Kerala Region.

  Circulars : Extension of due date for filing of ITRs/Audit Report for the A.Y. 2018-19 in respect of Kerala Region
  Visit to Get Source

  ---

• Legislature Does Not Differentiate Between Inbound and Outbound Investments for Arm's Length Price Adjustments.

  Case-Laws - HC : TP adjustment - The distinction between inbound and outbound investment is a distinction which does not take the case of revenue any further, as the Legislature has made no such distinction while providing for determination of any income on adjustments to arrive at ALP
  Visit to Get Source

  ---

• Taxpayer's Duty Met: AO Cannot Infer Past Years for Reassessment; Cash Transaction Reasoning Deemed Vague.

  Case-Laws - HC : Reopening of assessment - The duty of the assessee is to disclose the bank statements for the relevant year, which it did. As to what inferences are to be drawn for the previous years is not within the remit of the AO and consequently of no relevance whatsoever at least in considering whether to issue or not to issue reassessment notice, on just cash intensive transactions; clearly, this reason is vague and unjustified
  Visit to Get Source

  ---

• Court Considers Deductibility of Preoperative Expenditures in Subleasing Case; Assessee's Income Reported for Tax Purposes.

  Case-Laws - AT : Nature of expenditure - capital in nature being preoperative expenses or not - Since there is no dispute to the fact that the assessee has offered to tax the income arising to it on account of subleasing of the said property, therefore, by simple logic corresponding expenditure i.e. the Government fees paid towards sub leasing of the property should be allowed as expenditure.
  Visit to Get Source

  ---

• Capital Contributions for Effluent Systems Taxable Over Five Years; One-Fifth Taxed Annually Starting Initial Receipt Year.

  Case-Laws - AT : Deferred revenue income - Capital Contribution from the members for setting of effluent - spread the capital contribution received over a period of five years beginning from the year in which such contributions were received initially - taxability of 1/5th of the amount is affirmed.
  Visit to Get Source

  ---

• Creditors' Liabilities u/s 41(1): No Payments Made, Creditors Reintroduce Own Money Leading to Confirmed Additions.

  Case-Laws - AT : Outstanding creditors - cessation/ remission of liability u/s 41(1) - no amount stands paid to the creditors – they were introducing their own money - additions confirmed.
  Visit to Get Source

  ---

• Section 10AA: Trading Diamonds and Gold Jewelry in SEZ Qualifies as Service Activity, Eligible for Tax Deduction.

  Case-Laws - AT : Deduction u/s. 10AA - SEZ unit - Trading activity in diamond and gold jewellery to be considered as service activity or not - benefit of exemption allowed.
  Visit to Get Source

  ---

• Deduction Claim u/s 80IA Needs Over Ten Employees; Regular Employment Status Not Required for New Projects.

  Case-Laws - AT : Claim of deduction u/s. 80IA - Condition to employ more than ten persons - Just because such persons, were not regular employees of the assessee, would not mean that they were not employed by the assessee for the purpose of new production project.
  Visit to Get Source

  ---

• Interest on Excess TDS Classified as "Income from Other Sources," Not Business Profits, Affects Tax Treatment.

  Case-Laws - AT : Receipt of interest from the income tax dept on the excess TDS deducted - such interest is liable to be assessed as “Income from other Sources” and not under the head “Profits and gains of business or profession”
  Visit to Get Source

  ---

• Revision u/s 263 Dismissed: AO's Sufficient Inquiry on Liability Cessation u/s 41(1) Affirmed.

  Case-Laws - AT : Revision u/s 263 - Section 41(1) - Cessation or remission of liability - trade creditors transferred to capital accounts of the partners of the firm - AO has made reasonable and sufficient enquiries during the course of assessment proceedings - revision order set aside.
  Visit to Get Source

  ---

• Telecom Franchisees Eligible for Tax Deductions u/s 80IA(4)(ii) for Infrastructure Operations Like EPABX Installation.

  Case-Laws - AT : Section 80IA(4)(ii) - deduction available to franchisees of basic Telecom Services Providers is also are putting EPEX system i.e. to install, maintain and operate in dialing EPABX - This would amount to creation of infrastructure entitling them for deduction u/s 80IA.
  Visit to Get Source

  ---

• Section 153C Proceedings Valid if Assessing Officer Satisfies Notice Requirements, Despite Invalid Search Authorization u/s 132.

  Case-Laws - HC : Assessment proceedings u/s 153C against assessee will survive if AO is capable of generating satisfaction for issuing notice u/s 153C even if authorization of search u/s 132 was quashed in the case of the searched person.
  Visit to Get Source

  ---

• Redemption fines for illegal import activities aren't deductible business expenses under Income Tax Act Section 37.

  Case-Laws - HC : Redemption fine payable for irregularities or illegalities committed in the process of importing the goods. is nature of penalty paid for the infraction of law - not allowable as business expenditure u/s 37.
  Visit to Get Source

  ---

Customs

• Customs Duty Hike on US Imports Delayed to April 1, 2019; Originally Set for March 2, 2019.

  Notifications : Implementation of increased customs duty on specified imports originating in USA postponed from 2nd March, 2019 to 1st April, 2019
  Visit to Get Source

  ---

• Imported Goods Valuation Without Approval Not an Offense; No Confiscation or Penalty Under Customs Act Section 111.

  Case-Laws - AT : Valuation of imported goods - With the lack of approbation for enhancement of value, there is no offence that renders the goods liable to confiscation u/s 111 of Customs Act, 1962 - No penalty.
  Visit to Get Source

  ---

• Imported Goods Classification Follows Rule 1 of General Rules of Interpretation for Tariff Headings and Notes.

  Case-Laws - AT : Classification of imported goods - By application of rule 1 of “General Rules of Interpretation of Import Tariff”, classification of the goods is to be done in accordance with the terms of headings and any relative Section or Chapter Notes.
  Visit to Get Source

  ---

• Appellants Challenge Commissioner's Decision on Interest Rate, Arguing for 15% Instead of 24% Prior to Circular Issuance.

  Case-Laws - AT : Rate of Interest - appellants have challenged the order of Commissioner stating that interest should be charged from them @ 15% instead of 24% - Commissioner has given the benefit of reduced interest rate from 13.05.2002, which is much prior to the date of issue of this circular - Demand confirmed.
  Visit to Get Source

  ---

DGFT

• DGFT Amends Appendix 3B, Table 2 of MEIS to Boost Export Incentives and Enhance Indian Export Competitiveness.

  Circulars : Amendments in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS)
  Visit to Get Source

  ---

FEMA

• Amendments to FEMA Regulations 2019 Simplify Currency Export/Import Rules, Enhance Compliance, and Streamline International Trade Operations.

  Notifications : Foreign Exchange Management (Export and import of Currency) (Amendment) Regulations, 2019
  Visit to Get Source

  ---

IBC

• Operational Creditor's Petition Dismissed Due to Missing Debt Due Date in Part-IV of Insolvency Application.

  Case-Laws - Tri : Corporate insolvency process - outstanding operational debt - it is required for the applicant/Operational Creditor to specify as to the date from which the debt fell due in Part-IV of the application which is not disclosed - petition dismissed.
  Visit to Get Source

  ---

Service Tax

• High Court Mistakenly Accepted Writ Petition at Show Cause Notice Stage Under Article 226 of Indian Constitution.

  Case-Laws - SC : High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices.
  Visit to Get Source

  ---

• Graduate Marine Engineering Training Exempt from Service Tax Due to Legal Recognition of Certificates Issued.

  Case-Laws - AT : Commercial Training or Coaching or not - 1 year graduate Marine Engineering Training - the certificates issued are the ones recognised in law and hence, the courses conducted by the appellants in this regard fall under the exclusion category of the taxable services
  Visit to Get Source

  ---

• Service Tax Levy on Advance Payments: Extended Limitation Period Unjustified Due to Proper Reporting in Revised Return.

  Case-Laws - AT : Levy of service tax - amount received in advance - the amount of advance has been reflected in the revised return - Revenue is not justified in alleging suppression for invoking the extended period of limitation - SCN hit by limitation.
  Visit to Get Source

  ---

• Show Cause Notice Demands Interest on Delayed Service Tax Without Principal Tax Demand; Interest Linked to Duty Liability.

  Case-Laws - AT : Interest on delayed payment - no demand has been raised in the show cause notice - SCN issued to demand only interest amount - Admittedly, there is delay in payment of Service Tax and once the duty is admitted, interest cannot be detached from the duty liability.
  Visit to Get Source

  ---

Central Excise

• Appellants Qualify for CENVAT Credit on Service Tax for Outward Freight Due to Ownership and Cost Responsibilities.

  Case-Laws - AT : CENVAT Credit - service tax paid on GTA - as the ownership of the goods remained with the Appellants till the goods reached to the customer’s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight.
  Visit to Get Source

  ---

• Demand Confirmed: DG Sets Deemed Movable, Excise Duty Applicable on Goods Clearance, Not Erection.

  Case-Laws - AT : Excisability/movability - DG sets - immovable property or not - The duty has been demanded on the clearance of goods from the premises of the appellants and not on the act of erection of the D G Set in their premises - Demand confirmed.
  Visit to Get Source

  ---

• CENVAT Credit Valid for LDPE Pipes Not Cleared for Agriculture; Subject to Central Excise Duty, Claim Allowed.

  Case-Laws - AT : CENVAT Credit - when LDPE pipes are not cleared for agricultural and horticultural purposes, appellant’s claim that these products are liable to Central Excise Duty as being classifiable under chapter 39 seems to be correct proposition of the law - being not an exempted goods, credit allowed.
  Visit to Get Source

  ---

• Pune-II Commissionerate Investigation Validates Show Cause Notice Issued by Additional Commissioner, Confirms Jurisdiction and Authority.

  Case-Laws - AT : Jurisdiction - power of proper officer to issue demand notice - the investigation carried out by Pune-II Commissionerate and also the reply has been filed by the appellant to the Additional Commissioner, Pune-II Commissionerate - SCN issued by Additional Commissioner, Pune-I Commissionerate is valid and proper.
  Visit to Get Source

  ---

• Entities Not "Interconnected Undertakings," Excluded from Duty Liability Under Central Excise Rules.

  Case-Laws - AT : Valuation - interconnected undertakings - related party transaction - The finding that the two not being ‘interconnected’ with consequent exclusion from liability to duty under the Rules is legal and proper
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (2) TMI 1527
  Input Tax credit - inputs and input services used by for maintenance of its township/residential colony, guest house/transit house/training hostel, hospital, horticulture and maintenance security service in townships - Challenge to AAR Decision - Held that:- The ruling of the AAR that inward supplies received by the Appellant-I by way of management, repair, renovation, alteration or maintenance service or goods received for furnishing the residential colony shall not qualify for input tax credit is found to be correct. Expenditure incurred by the Appellant-I towards construction, reconstruction, renovation, additions or alterations or repairs to the residential colony is not eligible for input tax benefit if the said expenditure has been capitalized. Moreover, provision of housing to its employees by the Appellant-I is nothing but a perquisite. As clarified by the CBIC vide its Press Release dated 10.10.2017, referred to by the Appellant-I, perquisites are not subjected to GST. Therefore, since the perquisites are outside the scope of GST, input tax credit shall not be available to the Appellant-I in respect of tax paid on goods and services procured by it for management, repair, renovation, alteration or maintenance services (including watch and ward services, security services, Plantation/Gardening/Landscaping services, etc.) pertaining to residential accommodation for its employees in township/colony. Input and input services for maintenance of guest house, transit house and trainee hotel - Held that:- The guest house of the Appellant-I is used for temporary accommodation of its employees as well as non employees. Thought the provision of guest house may not be treated as a perquisite, it cannot also be treated as an activity integrally related to the business of the Appellant-I. That means, the guest house service provided by the Appellant-I to its employees as well as non-employees cannot be treated as an activity in course or furtherance of its business - the tax paid on inward supplies of goods and services in connection with the guest house cannot be allowed the benefit of input tax credit - Decided against assessee (Appellant-1) Services availed in relation to plantation and gardening within the plant area including mining area and the premises of other business establishments - Held that:- Creation and maintenance of green area/zone inside plant/mining/office premises is a business necessity for controlling pollution as well as atmospheric temperature. It is also a requirement for preventing soil erosion. This is also mandated in various laws under which the Appellant-I conducts its business such as the Forest Conservation Act, the Environment Protection Act, etc. Therefore, such activities are integral to the business activity of the Appellant-I and hence can be treated as activities in course or furtherance of its business. - Credit allowed - Decided against Revenue (Appellant-11) It is established that to claim input tax credit, an input service must be integrally connected with the business of manufacturing the final product Cost of an input service forming part of the cost of final product alone cannot be a condition to allow the benefit of input tax credit. The appeal filed by M/s.National Aluminium Company Ltd (Appellant-I) fails, whereas the appeal filed by the Commissioner of CX GST, Bhubaneswar (Appellant-II) succeeds partially - The ruling of the Odisha Authority for Advance Ruling in RE: M/S. NATIONAL ALUMINIUM COMPANY LTD., (NALCO) [ 2018 (10) TMI 748 - AUTHORITY FOR ADVANCE RULING, ODISHA] allowed in part.

  ---

• 2019 (2) TMI 1526
  Rate of IGST - Imported of specified Equipments delivered to the Eligible Institutions - liability of IGST on such imported Equipments by the OEM suppliers of imported equipment - Applicability of 51/1996-Customs, Dt. 23.07.1996 read with Notification No-43/2017-Customs, Dt: 30.06.2017 - Held that:- The applicability of Notification No. 51/96-Customs dated 23.07.1996 as amended vide Notification No-43/2017-Customs, Dt: 30.06.2017 to OEM Suppliers needs to be examined. In this case, the OEM supplier is a supplier located in India and the supply of equipments by such supplier to the specified Research Institutions is undeniably a case of domestic supply. The nature of such domestic supply can be intrastate or interstate depending on the location of such supplier. The equipments supplied might have been imported from other countries and such import might be with the sole intention of supply to some pre-determined Research Institutions, which might be entitled for IGST exemption provided through the aforesaid Notifications, such as the Applicant. In spite of that, such preceding import or the intent behind such import will not alter the nature of the transactions - the GST liability will be on the importer (in this case the Applicant) and exemption from the said liability can be claimed and availed. The Applicant cannot claim exemption from the liability of another taxable person. Further, Notification No. 51/96-customs dated 23.07.1996 is restricted to importers like Public funded research institution or a university or an Indian Institute of Technology or Indian Institute of Science, Bangalore or a Regional Engineering College, other than a hospital - In the instant case, the intended beneficiary is the specified eligible institutions such as the Applicant but not the OEM suppliers. The said notification is restricted to the public funded and non-commercial research institutions and I.I.T. etc. So, by any stretch of the imagination, the said notification read with notification no. 43/2017-customs dated 30.06.2017 cannot be extended to the OEM suppliers. Whether the decision of the GST Council granting the exemption is binding on the Department in the absence of non-issuance of corresponding Notification by the Central/State Government to give effect to such decision of the Council? - Held that:- Obviously the decision of GST Council is final and binding on the State and Central Government and accordingly, as per the decision of the council, Notification No.51/96-customs dated 23.07.1996 was amended providing for exemption from levy of IGST on import of goods. GST council is a constitutional body to formulate GST policies and to make recommendation to the Union and the State. Accordingly, every notification, circular or orders issued by the Central and State Governments are duly vetted by the GST Council. However issues pertaining to rate of tax and tax concessions/ exemption have to be as per the statutory notifications. Concessional rate of GST/IGST at the 5% vide Notification No-45- CGST(Rate), Dt:14.11.2017 and Notification No-47-lGST(Rate), Dt:14.11.2017 - whether applicable only for supply of specified Indigenous Equipments to the eligible Institutions fulfilling conditions as specified under Column-(4) of the said notification with effect from 15.11.2017? - Held that:- It is clarified that Government of India, Ministry of Finance (Department of Revenue) vide the aforesaid notifications exempts in access of 5% (2.5% in case of CGST) the specified goods as listed under column (3) of the said notification to specific institutions subject to the conditions as specified in the corresponding entry in column (4) Of the said notification. The said notifications do not distinguish between imported and indigenous goods. Therefore, concessional rate of IGST at 5%, CGST @ 2.5% and SGST @2.5% vide the aforesaid Notifications is applicable to supply of all the specified goods as mentioned above whether imported or indigenous.

  ---

• 2019 (2) TMI 1525
  Classification of goods - Gudakhu - liability to pay NCCD (National Calamity Contingency Duty) - Held that:- Gudakhu as manufactured by the applicant is certainly not classified under any specific tariff item in any of the sub-headings under the Heading 24 03. Accordingly, it can be classified and rightly so under the residual tariff item 2403 99 90 - other of the said Chapter Heading because of its composition, character and use. Determination of the liability to pay NCCD (National Calamity Contingency Duty) - Held that:- It is clarified that the aforesaid duty is a levy under the Central Excise Act and not under the CGST/ OCST/IGST Act. The scope of issuing a ruling u/s 98 of the OGST/CGST Act is limited to the extent prescribed in sub-section (2) of Section 97 of the OGST/CGST Act. NCCD being not a levy under the OGST/CGST Act, it is not within the competence and mandates of the Authority of Advance Ruling constituted u/s 96 of the OGST Act to give a ruling on the liability of the applicant to pay NCCD.

  ---

• 2019 (2) TMI 1524
  Vires of clauses (a), (b), (c), (d) and (e) of Sub Section 2 of Section 174 of the Kerala State Goods and Services Act, 2017 - jurisdiction or powers to levy, assess and collect tax under the Kerala Value Added tax Act, 2003 - repeal of statutes - transition provisions - Held that:- The issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS - [ 2019 (2) TMI 300 - KERALA HIGH COURT] , where the petitioner s plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017 - petition dismissed.

  ---

• Income Tax

• 2019 (2) TMI 1523
  TDS u/s. 195 - payment of legal professional fees to non resident - non deduction of tds - Held that:- SLP dismissed.

  ---

• 2019 (2) TMI 1522
  Penalty u/s 271(1)(c) - excessive deduction claimed under Section 10B - Held that:- Special leave petition is dismissed.

  ---

• 2019 (2) TMI 1521
  Condonation of delay - Reasons of delay - HELD THAT:- The explanation given by the appellant and rejected the Notice of Motion. The main reason given in the affidavit was that Ex- Chairman and Shareholder of the appellant/company Late Shri Inder Bhan Bhasin, who was looking after the affairs of the appellant, was suffering from health ailment due to which he was hospitalized, who subsequently died on 08.05.2017. The explanation given by the appellant was not accepted by the High Court. We are of the view that sufficient cause was shown for condonation of delay in filing the appeals which ought to have been accepted by the High Court. We, thus, set aside the order of the High Court dated 05.07.2018, condone the delay in filing the appeals. Appeals are restored before the High Court to be heard on merits.

  ---

• 2019 (2) TMI 1520
  Scope of order u/s 245(D)(4) passed by the Income Tax Settlement Commission - application for settlement under Section 254(D)(4) rejected on the ground of failure to make a full and true disclosure in the application for settlement - Held that:- Special Leave Petition dismissed.

  ---

• 2019 (2) TMI 1519
  Exemption / deduction u/s 10A or 10B - Technical services outside India in connection with the export of computer software - whether the Appellate Tribunal is erred in confirming the order of the Assessing Authority that the marketing expenses incurred by the appellant outside India to prospect its business also form part of ‘export turnover’ within the meaning of Explanation 2 to Section 10-A - Held that:- Special Leave Petition is disposed of in terms of the judgment in Commissioner of Income Tax & Anr. vs. Yokogawa India Ltd., (2016 (12) TMI 881 - SUPREME COURT).

  ---

• 2019 (2) TMI 1518
  Allowability of software expenditure - to be treated as a revenue expenditure OR capital expenditure - nature of the advantage in a commercial sense - Held that:- Special Leave Petition is dismissed.

  ---

• 2019 (2) TMI 1517
  TDS u/s 194L/194LA - cost of construction incurred by the assessee is the consideration paid for acquiring such rights, interest and titles from such squatters/hutments - whether consideration given by assessee to such squatters/ hutments was not in the nature of 'compulsory acquisition of land/ structure'? - Held that:- Since the tax effect in the present matter is below one crore, we see no reason to interfere in the matter. The special leave petitions are dismissed.

  ---

• 2019 (2) TMI 1516
  TP adjustment - Adjustment on account of excess money paid to PMP Bakony (AE) for acquiring share - difference between the actual investment and fair market value of the shares - HELD THAT:- The shares which have been purchased by the respondent assess are on capital account. The revenue is seeking to bring the difference between the actual investment and fair market value of the shares (investment) to tax it . This without being able to specify under which substantive provision would income arise. In our view, therefore, the issue arising here stands concluded by the decision of this Court in Vodafone (2014 (10) TMI 278 - BOMBAY HIGH COURT). On principle, if this court has held that Chapter X of the Act is machinery provision and can only be invoked to bring to tax any income arising from an international transaction, then, it is necessary for the revenue to show that income as defined in the Act does arise from the international transaction. The distinction between inbound and outbound investment is a distinction which does not take the case of revenue any further, as the Legislature has made no such distinction while providing for determination of any income on adjustments to arrive at ALP arising from an international transaction. No provision of the Act has been shown to us, which would allow the Revenue to tax a potential income in the present facts. Tribunal was correct in deleting the adjustment on account of excess money paid to PMP Bakony (AE) for acquiring share - decided against revenue

  ---

• 2019 (2) TMI 1515
  Refund under Section 244 - whether in carrying out verification under Section 143(1) and processing the refund, the existence of Form-29B is essential or not? - HELD THAT:- In the present case, though Form-29B was filed only on 07.09.2006, it is seen that an intimation under Section 143(1) was issued before that on 20.07.2003. A refund was also issued computing the tax payable under Section 115JB on 03.08.2006. Hence, it is very clear that the filing of Form-29B was not at all required for processing the return and granting the refund which had been done prior to such filing of statement in Form- 29B. Hence, the date of filing of Form-29B cannot at all be relevant for attributing delay on the part of the assessee for processing of refund. Now, the question arises as to clause (b) as we extracted from the impugned order hereinabove. Admittedly, the assessee had filed the original return on 29.10.2002, which was processed and a refund of Rs. 86,333/- issued on 15.05.2003. Subsequently, revised return was filed on 22.03.2004 claiming a refund of Rs. 1,71,76,655/-. Hence, necessarily, the refund as now ordered by the AO can only relate back to the date of filing of the revised return. The delay in claiming the enhanced refund can only be attributable to the assessee and the same was claimed by a revised return only on 22.03.2004. Hence for an amount of Rs. 1,70,90,322/-, the interest can be computed only from 22.03.2004. Answer the questions partly in favour of the assessee and partly in favour of the Revenue. We do not think that the orders of the lower authorities restricting the interest till 08.09.2006 can be upheld. We have already found that Form-29B is not at all significant for processing of the return as is seen from the facts of the case which indicate that such processing having been done far earlier to the filing of such statement.

  ---

• 2019 (2) TMI 1514
  Reopening of assessment - undisclosed share application amounts - substantial cash transactions - HELD THAT:- The primary duty is upon the assessee to disclose material facts relating to share application amounts, credits claimed etc. In the present case, the details of all sundry creditors were disclosed; the nature of business transactions by cash intensive transaction, all bank statements were also furnished in the original assessment. In case the AO was not satisfied, he ought to have made further inquiries seeking confirmations in respect of particular entries. In the present case, no such inquiry was made. The failure of the Revenue in that regard does not clothe it with the power to carry out reassessment under Section 147/148. This Court is also of the opinion that the principal basis for reassessment appears to be the opinion of the Revenue that substantial cash transactions were carried out, having regard to the date of opening of the accounts, which were not verified. Now this Court is of the opinion that this reason is vague. The duty of the assessee is to disclose the bank statements for the relevant year, which it did. As to what inferences are to be drawn for the previous years is not within the remit of the AO and consequently of no relevance whatsoever at least in considering whether to issue or not to issue reassessment notice, on just cash intensive transactions; clearly, this reason is vague and unjustified. - Decided in favour of assessee.

  ---

• 2019 (2) TMI 1513
  Applicability of section 44BB - services rendered by the assessee to ENI India Ltd. - Income by way of FTS u/s 9(1)(vii) - whether section 44BB is not applicable to second level contractors? - HELD THAT:- Provision of section 44BB are held to be applicable to the tax payer being a second leg contractor/sub-contractor. Including the decision in the case of DIT Vs. OHM Ltd. [2012 (12) TMI 422 - DELHI HIGH COURT] that the services rendered in relation to extraction and production of mineral oil are taxable u/s 44BB. A perusal of the service contract mentioned elsewhere clearly shows that the appellant had rendered similar services to ENI India Ltd for which services it received the revenue which it offered u/s 44BB of the Act. Considering the facts of the case in totality, in the light of judicial decisions discussed hereinabove, we are of the opinion that the assessee’s case comes within the purview of section 44BB and its income should be taxed accordingly. First substantive grievance is accordingly allowed. We hold that the assessee’s case comes within the purview of section 44BB of the Act. Levy of interest u/s 234B - HELD THAT:- The insertion of the proviso cannot be considered to have retrospective effect so as to expose a non-resident company to levy of interest u/s 234B of the Act for the assessment years prior to assessment year 2013-14. In the light of the above, we direct the Assessing Officer to not charge interest u/s 234B. See Technip UK [2018 (12) TMI 1069 - ITAT DELHI]

  ---

• 2019 (2) TMI 1512
  Addition u/s 68 - Addition towards deposits in the SB accounts of Catholic Syrian Bank and SBI - assessee is basically an agriculturist, having substantial holding of land - CIT(A) was of the view that the conduct of the assessee in submitting the details and documents requisitioned by the Assessing Officer was not satisfactory - HELD THAT:- CIT(A) directed the Assessing Officer to give credit for agricultural income, sale of land and past withdrawals. The assessee had also not disclosed the professional income. The assessee tried to prove source by way of personal loan from 3 people of Rs. 1 lakh each, for which he had not furnished either the confirmation or the PAN of the parties concerned. It was observed that no prudent person would take loan, when he already has substantial money with him. Since the assessee had also not expressly stated whether these were cash loans or not to explain the source of the deposits, the CIT(A) correctly doubted the genuineness of transaction -assessee had not been able to explain the sources for Rs. 3 lakhs out of Rs. 49,22,000/- deposited in various Bank accounts. - Decided against assessee Disallowance u/s. 80C - payment of tuition fees - HELD THAT:- The deduction claimed u/s. 80C is to be allowed u/s. 80C(2)(xvii) of the Act which states that tuition fee/education fee paid by a parent towards education of his/her children is entitled for deduction. The assessee is entitled for deduction to the tune of Rs. 1.5 lakhs under this provision subject to the provision of section 80C(4)(c) of the Act on furnishing the requisite details. Regarding deduction u/s. 80C, the assessee has not produced any details of payment of tuition fees for the year under consideration before AO. As such, we remit this issue to the file of the Assessing Officer with a direction to the assessee to furnish the details of payment of tuition fees before the Assessing Officer and thereupon decide the same. With regard to deduction u/s. 80TTA, the assessee has also not furnished the details of interest income earned on saving Bank account. As such, we remit this issue to the file of the Assessing Officer with a direction to the assessee to provide necessary details. These grounds of appeal of the assessee are partly allowed for statistical purposes.

  ---

• 2019 (2) TMI 1511
  Addition on account of legal and professional fees paid to Accenture Service Pvt. Ltd. - HELD THAT:- CIT(A) is not justified in uphelding the disallowance being the professional fees paid to M/s. Accenture Services Private Limited as capital in nature. The above ground raised by the assessee is accordingly allowed. Disallowance of government fee - the said expenditure is capital in nature being preoperative expenses of a project, despite the fact that the said expenditure incurred by the assessee is of revenue nature - HELD THAT:- It is the submission of the assessee that since the assessee has already offered to tax the income arising on account of subleasing of the said property to the group concerns, therefore, the corresponding expenditure incurred by the assessee for earning such income should also be allowed as deduction. We find merit in the above arguments of the Ld. Counsel for the assessee. Since there is no dispute to the fact that the assessee has offered to tax the income arising to it on account of subleasing of the said property, therefore, by simple logic corresponding expenditure i.e. the Government fees paid towards sub leasing of the property should be allowed as expenditure. CIT (A) is not justified in sustaining the addition treating the same as capital in nature. Disallowance of depreciation on UPS - @60% OR 15% - Held that:- As relying on BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] UPS is also an integral part of computer periphery system on which depreciation at 60% is allowable. We accordingly allow this ground. Disallowance u/s 14A - HELD THAT:- The coordinate benches of the Tribunal are taking the consistent view that disallowance u/s 14A r.w. Rule 8D cannot exceed the actual exempt dividend income received. Since the assessee in the instant case has received dividend income of Rs. 1,45,616/- only and has disallowed suo-moto an amount which is in excess of the actual dividend income received, therefore, we are of the considered opinion that no further disallowance u/s 14A r/w Rule 8D is called for. The additional ground raised by the assessee is accordingly allowed.

  ---

• 2019 (2) TMI 1510
  Penalty u/s 271E - repaying the interest on loans otherwise than by crossed cheques/drafts - HELD THAT:- Circular No.9 dated 26.4.2016 issued by CBDT wherein it was observed that where any High Court decides this issue on the aspect of limitation contrary to the department view thereon, shall not be operative in the area falling under the jurisdiction of the relevant High Court. CIT(A) after noticing this Para 6 of the Circular, while respectfully following the decision of the Hon’ble jurisdictional High Court, hold that the period of limitation to be starting from the date of issuance of notice by the AO and not from the initiation of penalty proceedings issued by the JCIT/ACIT and on that score held that the penalty order dated 30.12.2011 is unsustainable on the ground that in view of the period of limitation provided u/s 275(1)(c), limitation expires at the latest by 30.6.2011 itself. - Decided against revenue.

  ---

• 2019 (2) TMI 1472
  Redemption fine - allowablity as business expenditure u/s 37 - irregularities or illegalities committed in the process of importing the goods - HELD THAT:- AO had summoned the import licence holder M/s. Rajnikant Brothers whose representative had stated before the Assessing Officer that M.P. Gupta, the present assessee had imported almond by using the licence and that redemption fine of Rs. 75 lacs paid to the Madras Custom House was done by M.P. Gupta. All transactions were made by him and he was responsible for the fine. He stated clearly that as per the agreement, M/s. Rajnikant Brothers were only entitled to the service charges. There was ample evidence on record suggesting that the assessee had made imports through his direct involvement by using the import licence of M/s. Rajnikant Brothers and that M/s. Rajnikant Brothers merely received an agreed commission. The assessee cannot disassociate or divest himself from the irregularities or illegalities committed in the process of importing the goods. Thus, the penalty was for the infraction of law committed by the assessee. -Decision HAJI AZIZ AND ABDUL SHAKOOR BROTHERS VERSUS[1960 (11) TMI 15 - SUPREME COURT]folloed- Decided in favour of the Revenue and against the assessee.

  ---

• 2019 (2) TMI 1471
  Validity of assessment u/s 153C - satisfaction requirement of section 153BD undisclosed income belongs to some other person - search was declared invalid in case of original person - HELD THAT:- For the purpose of assessment under section 153A of the Act, the validity of the authorisation is imperative; whereas in case of an assessment under section 153C, it is handing over of the books of account or documents or assets seized or requisitioned which is material. Once the AO of the other person is in receipt of the books of account or documents or assets seized or requisitioned, and proceeds further with the assessment, such assessment would not be rendered invalid on account of the search having subsequently held to be invalid. Provisions of Section 158BD 153C are more or less in pari materia.- In the light of the decision of the Supreme Court in Pooran Mal [1973 (12) TMI 2 - SUPREME COURT) as well as Gunjan Girishbhai Mehta [1973 (12) TMI 2 - SUPREME COURT], merely because the original search is held to be invalid, the consequential action under section 153C of the Act would not become invalid. As held by the Supreme Court in Gunjan Girishbhai Mehta (supra), when the assessee has participated in the proceedings for assessment, the information discovered during the course of search, if capable of generating satisfaction for issuing notice under section 153C, cannot altogether become irrelevant for further action under section 153C - ITAT has erred in quashing the assessment proceedings under section 153C of the Act initiated against the assessee on the ground that the authorisation of search under section 132 of the Act was quashed in the case of the searched person. - Decided in favour of the revenue

  ---

• 2019 (2) TMI 1470
  Addition u/s. 56 (2) (viib) - allotment of shares less then fair market value - Valuation of share premium received- Limited Scrutiny selection as Large share premium received during the year and Low income in comparison to high loans/ advances/ investment in shares - HELD THAT:- It is true that the provision refers to consideration for issue of shares received in any previous year and it is equally true that Rs. 4.03 crores was received in A. Y. 2012-13 and Rs. 40 lacs was received in A. Y. 2013-14 but the fact of the matter is that the entire share allotment was done during the year under consideration, therefore, it cannot be said that the assessee was not liable to justify it share premium supported by the valuation report as mentioned under Rule 11 U and 11 UA. The valuation report which was the counsel sought to file before us should have been filed before the AO so that the same can be examined within the purview of rules 11 U and 11 UA. We restore this issue to the files of the Assessing Officer. The assessee is directed to justify the share premium as per provisions of law and as per Rule 11 U and 11 UA of the IT Rules. As mentioned elsewhere the part of the share application was received in earlier assessment years but since in those assessment years shares were not allotted, therefore, the share premium could not have been examined by the Assessing Officer u/s 56 (2) (viib). Since the entire transaction has crystallized during the year under consideration which also includes the share premium of Rs. 790 per share needs to be examined during the year under consideration only. AO is directed to examine the justification of share premium as per the procedure prescribed under Rule 11 U and 11 UA of the IT Rules and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purpose.

  ---

• 2019 (2) TMI 1469
  Eligibility to deduction u/s 80IA(4)(ii) - available to basic Telecom Services Providers is also available to franchisees of such basic service providers also, which is only putting EPEX system without creating infrastructure in the field of Telecom - HELD THAT:- This issue in favour of the assessee, wherein it has been held that the assessee who are franchisees of BSNL and who have been permitted to install, maintain and operate in dialing EPABX under the franchisees to support the department can be treated to have provided “basic telephone services". This would amount to creation of infrastructure entitling them for deduction u/s 80IA. Relying on authoritative pronouncement of the Hon’ble jurisdictional High Court in the assessee’s own case [2014 (12) TMI 1331 - GUJARAT HIGH COURT] we are of the view that question referred to this Bench deserves to be answered in favour of the assessee, and against Revenue. It is pertinent to observe that the appeal has also been transferred to the Special Bench, therefore, we proceed to deal with the appeal on merits. On perusal of the record would indicate that only substantial issue involved in this appeal is, whether deduction under section 80IA(4)(ii) is available to the assessee or not. Considering the opinion of Special Bench coupled with ratio laid down by the Hon’ble High Court in assessee’s own case, we are of the view that the assessee is entitled for deduction under section 80IA(4)(ii) of the Act. CIT(A) has rightly granted the same to the assessee. - Decided against revenue.

  ---

• 2019 (2) TMI 1468
  Unexplained expenditure u/s 69C - bogus purchases -Admission of additional evidence- HELD THAT:- We find that the assessee in this case has submitted all the necessary evidences in support of the impugned transactions and the CIT(A) has drawn a correct conclusion. It is clear that the A.O. has given an extremely short notice, wherein the notices could not be responded. All the necessary details were subsequently available and the same were provided to the A.O. in the remand proceedings. The details have also been made available to us in the paper book. From the same, we find that all the necessary confirmations of the transactions are available. All the payments are through banking channels. No discrepancy in this regard is noted. The other planks made by the assessee are also cogent that the assessee has provided the copies of the bank statements for all the additions proposed to be made u/s.69C of the Act. Hence, the additional unexplained expenditure as mandated in section 69C is not sustainable, as section 69C provides that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. When the assessee has provided all the evidences of the payment and the payments are recorded in the books of account, they are not liable to be added u/s. 69C of the Act. Furthermore, the transaction from some of the parties have also been accepted in the subsequent assessment year. It is also not the case that any sales corresponding to the purchases/transactions has been disallowed or doubted. - Decided in favour of assessee.

  ---

• 2019 (2) TMI 1467
  Deduction u/s. 10AA - SEZ unit - Trading activity in diamond and gold jewellery to be considered as service activity or not - Instruction No.4/2004- HELD THAT:- In view of the decision of the Tribunal order in assessee’ own case [2017 (2) TMI 109 - ITAT MUMBAI] we uphold the order of the Ld. CIT(A) in allowing the claim for deduction u/s. 10AA of the Act for the assessee as held that the assessee in the case on hand is eligible for deduction of its income earned from trading exports of diamonds under section 10AA of the Act and therefore uphold the finding of the learned CIT(A) on this issue in the impugned order - Ground No.1 of the grounds of appeal of the Revenue is dismissed. Interest receipts on fixed deposit kept with bank by way of margin money- HELD THAT:- We observe that the Tribunal in the A.Y. 2011-12 held that interest income from fixed deposit kept with bank by way of margin money for the purpose of business of import / export trading in diamonds constitutes business receipts for the purpose of deduction u/s. 10AA There is no independent finding by the CIT(A) as to whether this interest was earned on fixed deposits utilized for margin money and used for the purpose of business. Ld. CIT(A) simply extracted the submissions of the assessee and following the order of the Tribunal deleted the interest disallowance. In the facts and circumstances, we are of the view that this issue has to be reexamined by the Assessing Officer after obtaining the necessary information from the assessee to prove that this interest income was earned only on Fixed deposits made on margin money utilized for the purpose of business and not out of any surplus funds which were used for earning interest income by the assessee. Therefore, the Assessing Officer is directed to examine the issue afresh in the light of the evidences produced before him - Appeal of the Revenue is partly allowed for statistical purpose

  ---

• 2019 (2) TMI 1466
  Addition u/s 69A - unexplained income in the form of cash found from the locker of the appellant in Bank - search u/s 132 - HELD THAT:- The assessee has submitted that the above amount has been generated out of his past savings. It is also not in dispute that the assessee was serving with some company for a very long time and his son is settled in United Kingdom - appellant is aged 70 years and staying with his son who meet the household expenditure. The assessee has also submitted his bank statement with ICICI bank wherein it is found that he has regularly withdrawing a sum of INR 200,000 and out of which he deposited only INR 80,000/– and therefore it is apparent that at least to the extent of sum of INR 120,000 is available in his hands on the date of search. It is not the case of the revenue that the above amount has been withdrawn from the bank of the assessee by the assessee for spending for something else. In view of this, we are of the considered opinion that the assessee should be granted the credit of at least INR 120,000/- . Accordingly AO is directed to reduce the addition from INR 170,000 to INR 50,000 only. Accordingly ground number 1 of the appeal of the assessee is partly allowed. Unexplained jewellery found from the residence and locker of the appellant - assessee submitted that the above jewellery belonging to her brother-in-law Mr Sanjay Jain and his family who kept this jewellery in her custody before moving to the United Kingdom - HELD THAT:- After granting benefit of 87 g of jewellery belonging to the other relative the net jwelery remains is of 2255.81 g. Assessee submitted a chart of her family members and stated that according to the instruction number 1916 the assessee must get the benefit of 2550 g of jewellery. The claim of the assessee is also supported by the decision in case of in CIT vs Ratanlal Veparilal Jain [2010 (7) TMI 769 - GUJARAT HIGH COURT]. Therefore we set aside the whole issue back to the file of the learned assessing officer with a direction to follow the decision of the honourable Gujarat High Court and grant assessee the benefit of instruction number 1916. Accordingly this ground of appeal of the assessee is partly allowed with above direction. Unexplained income in the form of cash found from the residence of the assessee under section 69 - HELD THAT:- The argument of the assessee deserves to be rejected at the threshold itself because such an exemption was given to the persons who are depositing already monetised currency notes in their bank account and not for any undisclosed income. Even otherwise there is no such provision in the income tax act to grant benefit of statement made by any other government agencies from the taxable income of the assessee u/s 69A of the act. Unless the law provides specific exemption, no such deduction can be taken from the statement or policy decision taken by any other government agencies. From the explanation submitted by the assessee, it is apparent that assessee has kept his stand changing over a period of time. The assessee first gave an explanation about savings made by the family members. It was merely an explanation without any supporting evidences. Assessee has failed to explain the source of cash found during the course of search - we confirm the orders of the lower authorities in taxing the sum of INR 103800/– u/s 69A - Decided against assessee.

  ---

• 2019 (2) TMI 1465
  Deferred revenue income - Capital Contribution from the members for setting of effluent - spread the capital contribution received over a period of five years beginning from the year in which such contributions were received initially - HELD THAT:- We set aside the issue as far as determination of taxability of the receipts received in this year to the file of the AO. AO shall re-work the amount out of the contribution received in this year on the basis of the Tribunal’s findings in the Asst.Year 2001-02 - the receipt received by the assessee during the accounting period relevant for this assessment year is also to be spread over, over a period of five years. The total receipt cannot be assessed in this year. As far as the enhancement made by the CIT(A) is concerned, we do not find any error in the order of the ld.CIT(A), because, the assessee ought to have shown that the amount as income on the basis of claim made in earlier years, i.e. whatever amount representing the alleged 1/5th ought to be offered for taxation in this year. FAA has rightly made the enhancement. See EFFLUENT CHANNEL PROJECTS LTD., VADODARA AND OTHERS VERSUS DCIT, CIR. 1 (2) , VADODARA AND OTHERS [2015 (7) TMI 932 - ITAT AHMEDABAD] - decided against revenue.

  ---

• 2019 (2) TMI 1464
  Claim of deduction u/s. 80IA - splitting up or reconstruction of a business already in existence - Condition to employ more than ten persons - satisfaction of three of the sub clauses namely clauses (i), (ii) and (v) of the Sub Section (2) - assessee was producing movies sine Nineteen Eighties and production of a new movie - scope of amendment to act - HELD THAT:- As clearly held in the case of Jyoti Prakash Dutta [2014 (9) TMI 362 - BOMBAY HIGH COURT] that an assessee which was a film production unit, and which was not founded by transfer to a new business any machinery or plant previously used for any purpose, was entitled for deduction u/s.80IB of the Act. Conditions stipulated in Sub Section (2) of both the Sections(80IA & 80IB) are more or less pari materia- No doubt, the judgment was rendered by the Hon’ble Bombay High Court in the context of Section 80IA of the Act Section 80IA of the Act was substituted by Sections 80IA and Section 80IB by Finance Act, 1999 w.e.f. 01.04.2000. The block assessment period for which this appeal relates is 01.04.1986 to 30.01.1997, and the applicable law is Section 80IA of the Act as it stood before 01.04.2000. Therefore we cannot say that ld. CIT(A) fell in error in applying the judgment of Hon’ble Bombay High Court in the case of Jyoti Prakash Dutta (supra), which was in relation to section 80IB. Production of a cinema film would amount to manufacturing or processing of goods- The project of the assessee on which it had claimed deduction u/s.80IA of the Act was not formed by splitting up or reconstruction of a business already in existence. Assessee was running a production house and each new project for a new film, in our opinion cannot be considered as split up or reconstruction of the business already in existence. It may be true that assessee had used machinery already available with it, alongwith hired machinery for the new film project. However, nothing has been brought on record by the Revenue to show that there was any transfer of used machinery or plant to a new business. That production of a cinema film would amount to manufacturing or processing of goods has been clearly spelt out by CBDT in Circular No.24 (F. No.6/22/68-IT (A-I), dated 23.07.1969. Condition to employ more than ten persons - regular employees - Coming to the question whether assessee had employed more than ten persons, admittedly, list mentioned by the ld.AO at para 3 (i) of this order clearly indicate that there were more than ten persons working for the film project. Just because such persons, were not regular employees of the assessee, would not mean that they were not employed by the assessee for the purpose of new production project. In the circumstances, we are of the opinion that ld. CIT(A) was justified in allowing the claim of deduction under Section 80IA - Decided against revenue

  ---

• 2019 (2) TMI 1463
  Revision u/s 263 - lack of enquiry - HELD THAT:-Difference of opinion-there is no lack of enquiry and the AO made the enquiries and completed the assessment, substitution of the Commissioner’s view and the suspicion of the Pr.CIT cannot be a case for revision u/s 263 of the Act. The revision u/s 263 cannot be taken up for difference of opinion. Therefore, we hold that there is no error in the order passed by the AO which requires revision u/s 263. Section 41(1) - Cessation or remission of liability - trade creditors transferred to capital accounts of the partners of the firm - Entries made in the books of accounts unilaterally - HELD THAT:- AO examined the purchases and sales and accepted the purchases and sales. From the scrutiny of the partners capital accounts, trade creditors account, we understand that the assessee has unilaterally transferred the sums to the partners capital accounts and there was no cessation or remission of the liability. The same fact is established as per the account copies placed in the paper book in page no.47 to 49 of the paper book - tax the trade creditors balances u/s 41(1), the cessation or remission of the liability has to be allowed by the trade creditor but not by the beneficiary assessee and the entries made in the books of accounts are immaterial. There must be consent form the creditor to waive the liability. This view is upheld by the Hon’ble Apex court in the case of Commissioner of Income tax Vs Sugauli Sugar Works (P.) Ltd [1999 (2) TMI 5 - SUPREME COURT]. In the instant case, the assessee has transferred the trade credit balances to the capital accounts without any confirmation from the trade creditor for cessation or remission of liability, hence, it is incorrect to hold that the said sum required to be brought to tax u/s 41(1) of the Act. As per the material placed before us by the assessee and discussed in the preceding paragraphs clearly establish that the AO has made reasonable and sufficient enquiries during the course of assessment proceedings. Thus, there is no error in the order passed by the AO and the Ld.Pr.CIT has incorrectly invoked the jurisdiction u/s 263 of the Act. Suspicion- Mismatch of signatures of the trade creditors in the confirmation letters for the impugned A.Y. as well as in the subsequent A.Y. - HELD THAT:- Merely on the suspicion it is unjustified to hold that the credit is not bonafide. Since the issue was verified by the AO at the time of assessment, the purchases and sales were accepted and the payments were made through bank cheques, which the AO has verified all the facts during the course of assessment, we find no error in the assessment order which caused prejudice to the department. Therefore, we hold that there is no case for jurisdiction u/s 263 on this issue. Accordingly, we set aside the order of the Pr.CIT and allow the appeal of the assessee. Section 36(1)(iii)- Interest on borrowed capital- Interest free funds- Disallowance of interest on borrowed capital for construction of building at Vijayarai Village and Koppal Karnataka - HELD THAT:- There is no doubt that the assessee is having interest free funds in the form of partners capital accounts, trade creditors, reserves and surpluses and the assessee has utilized the non-interest bearing funds efficiently and charged the interest reasonably and the issue was verified by the AO. Therefore, we find no error in the assessment order which caused prejudice to the interest of the revenue. Accordingly, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee. Depreciation of land on residential apartment - HELD THAT:- AO called for the details of the additions to fixed assets along with the original bills and also called for the details of the depreciation which was furnished by the assessee. As per the original sale bill, there is no allocation of cost to the land and super structure separately. The assessee got undivided share of land in apartment complex. The sale consideration consists of land cost as well as the cost of construction. Normally in apartments, the sale of apartment is fixed on the basis of plinth area - verification of the sale deed, the AO allowed the depreciation on the apartment on composite cost without separately allocating the cost of land and cost of building. Since the AO examined the issue and allowed the depreciation though it is prejudicial to the extent of the depreciation on land, having verified the issue at the time of assessment, there is no error in the assessment order made by the AO, thus, the case is beyond jurisdiction u/s 263. Valuation of the closing stock - HELD THAT:- The assessee collects the human hair domestically as well as from the temples and grades the same according to the quality. The assessee submitted before the AO, the closing stock and its valuation, grade wise. The price of the human hair ranges from Rs. 14 to Rs. 4640/- per kg. The price of each grade is different depending on the quality. The assessee has valued the closing stock at Rs. 4,854/- per kg and the waste was valued at Rs. 14 per kg and the average price came to Rs. 553/- per kg. Except making observation that the AO has not verified the closing stock, the Pr.CIT did not make out a case that there is an error in the assessment order which caused prejudice to the department. Since the issue has been examined by the AO and satisfied regarding the valuation closing stock at the time of assessment we find no error in the assessment order which calls for revision u/s 263 of the Act. - Assessee appeal allowed.

  ---

• 2019 (2) TMI 1462
  Revision u/s 263 - Lack of enquiry or inadequate enquiry - HELD THAT:- Insofar as two issues, i.e. excise duty not paid and claim of reversal of provision, the AO has made addition in the order passed u/s 143(3) r.w.s. 263 dated 29-09-2016. Further, we are of the considered view that the PCIT was erred in invoking the jurisdiction conferred u/s 263 under the guise of lack of enquiry or inadequate enquiry. Therefore, we are of the considered view that the issues questioned by the PCIT are not coming within the ambit of lack of enquiry or inadequate enquiry. For remaining issues assessee has already suo moto disallowed liability of contingent nature in statement of total income for AY 2008-09 and also capital expenditure debited to P&L Account has been disallowed in the statement of total income. As regards non disallowance of certain expenditure u/s 40(a)(ia), AR has brought out all materials to prove that there is no loss of revenue as provisions of section 40(a)(ia) has been amended w.e.f. 01-04-2010 by the Finance Act, 2010, relaxing the time limit to deposit tax up to the date of filing of return of income. Various Courts have held that such amendment to provision is retrospective in nature. The assessee also filed necessary details to prove that it has paid the TDS on or before due date of filing return of income. Similarly, the assessee has explained the issue of excess deduction u/s 43(6) so as to make it clear that there is no loss of revenue as it has given proper treatment in its books of account and statement of total income. AR further made it clear that this issue had not been questioned by the then CIT-1, Mumbai in the first found of proceedings u/s 263 and hence, under similar set of facts, the issue cannot be questioned once again by the PCIT. - Decided in favour of assessee.

  ---

• 2019 (2) TMI 1461
  Outstanding creditors - cessation/ remission of liability u/s 41(1) - addition u/s 69A - power of CIT(A) to issue direction u/s 150(1) - HELD THAT:- If the assessee paid the creditors, s. 69A would come into play. If, on the other hand, someone paid them on assessee’s behalf u/s 41(1) would get attracted on account of cessation of a trade liability; the assessee admittedly not incurring any other liability in lieu of such payment. Thirdly, if, as claimed, no amount stands paid to the creditors – with they introducing their own money, s. 41(1) would again get attracted on account of remission of the trade liability. No hesitation in upholding the assessment as the assessee’s income, being the amount by which the assessee’s liability to SSS has undergone reduction during the current year. Though one could argue that the assessee’s accounts reflecting a total liability to the trade creditors at Rs. 14.43 lacs, which does not exist as at the year-end, so that the entire amount ought to be, as by the AO, assessed as income, it needs to appreciated, that the evidence with the Revenue, in the form of denial of the assessee’s debt in their favour by the trade creditors, itself states of reduction in the said liability over a period of time. Agree with the CIT(A) that the reduction obtaining during a particular year is to be assessed as income for that year. His directions, accordingly, to that effect to the AO u/s. 150(1), subject to the fulfillment of the conditions u/s. 150(2), cannot be faulted. However, of the payment of Rs. 4 lacs to JRJC during f.y. 2004-05, Rs. 3 lacs stands already paid during f.y. 2003-04 as per the assessee’s accounts. Accordingly, it is only the difference, i.e., Rs. 1.0 lac, that can be assessed as income u/s. 41(1) for AY 2005-06 on that account. This aspect shall be duly considered by the AO while giving effect to the said directions by the ld. CIT(A).

  ---

• 2019 (2) TMI 1460
  Interest on Income Tax Refund - Correct head of income - addition under the head "Income from other Sources" as the assessment has been framed by applying a net profit @ 7% on the Gross receipt of the assessee - assessment as busniss income - HELD THAT:- As in Commissioner of Income Tax-I V vs. M/s Delhi State Industrial & Infrastructure Development Corporation Ltd. [2012 (8) TMI 158 - DELHI HIGH COURT] dealing with the similar issue has held that interest received on income tax refund is a statutory interest received and hence has to be subject to tax under the head income from other sources. In the instant case the assessee has received interest from the income tax dept on the excess TDS deducted and hence the interest is liable to be assessed as “Income from other Sources” and not under the head “Profits and gains of business or profession” - decided against assessee.

  ---

• 2019 (2) TMI 1459
  Estimation of profit on bogus purchases - profit element was directed to be computed @ 8% by CIT-A - HELD THAT:- The statement of Shri Bhavarlal jain was recorded during the course of search, wherein, he admitted that he provided accommodation entries of bogus purchases including the present assessee. The assessee was asked to produce necessary details. No details were filed by the assessee nor the party was produced for verification in spite of repeated opportunities. Considering the factual matrix, the profit on such bogus purchases was calculated @ 12.5% by the ld. Assessing Officer. On appeal before the CIT (Appeal), various decisions were considered and finally, the profit element was directed to be computed @ 8%, which is under challenged before this Tribunal. No infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), because, he has already taken a reasonable view considering various decisions, including the decision M/s Dhadda Gems Ltd. [2017 (6) TMI 65 - ITAT MUMBAI] - Decided against assessee.

  ---

• 2019 (2) TMI 1457
  Disallowance u/s 14A - expenditure incurred by the assessee for earning exempt income - HELD THAT:- The assessee had not earned any exempt income during the year under consideration. The Tribunal, therefore, followed the decision of Delhi High Court in case of CIT Vs. Holcim India (Pvt.) Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT) as ruled that when there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made.

  ---

• Customs

• 2019 (2) TMI 1509
  Imposition of penalty - transporting of smuggled goods - fictitious firms - Held that:- The special leave petitions are dismissed.

  ---

• 2019 (2) TMI 1508
  Valuation of imported goods - silver polyester metal yarn - polyester metallic yarn (kasab) - undervaluation - rejection of declared value - enhancement of declared value - Held that:- From the records, it would appear that the rejection of the values declared in the bills of entry, and the consequent confirmation of differential duty emanating from re-determination of value, is based entirely on the admissions in the statements of Shri Rajesh Gandhi recorded during the course of investigations. The show cause notice proposes to discard the declared value as a prelude to re-ascertainment of assessable value for determination of the correctness of duty assessed at the time of clearance of the goods. In the scheme of assessment to duties of customs that are leviable on ad valorem, the provisions of section 14 of Customs Act, 1962 are activated. Value of goods, whether viewed from the perspective of commercial practice or economic theory, is not amenable to scientific formulation and further complicated by transactions occurring across boundaries of legal jurisdictions with differing policy practices - In the scheme of valuation, it is trite that the transaction value, evident from invoices, of the goods that are imported is to be the assessable value. Not unnaturally, there are presumptions for such acknowledgement which are embodied as combinatorial expressions in section 14 (1) of Customs Act, 1962. Any transaction that lacks any one or more of the qualifications prescribed therein should, necessarily, be externed from its ambit with recourse to section 14 (2) of Customs Act, 1962 and, thereby, within the coverage of Rules framed thereunder. It is clear from the records that the appellants had not been able to produce any evidence that would counter the grounds for discarding the declared value. To that extent, the declared values can be found to be unacceptable. However, the consequences of such discrediting is not an arbitrary determination of value. The provisions of Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 require that sequential application to be apparent in such proceedings - Insofar as the valuation of goods, based on applicability of rule 6 of the said Rules is concerned, it is seen that the bills of entry pertaining to those imports had not been made available to the appellants. Neither are the details of those bills available on record. It is, therefore, impossible to ascertain if these were similar goods within the definition in the said Rules. The rigour articulated in re Eicher Motors Ltd is not in evidence in the impugned order. Consequently, the re-determination of value fails the test of law. Confiscation - penalties - Held that:- With the lack of approbation for enhancement of value, there is no offence that renders the goods liable to confiscation under section 111 of Customs Act, 1962. In the absence of justification for invoking the provisions for confiscation of goods, penalties under section 112 of Customs Act, 1962 fails in relation to the importer-appellants and the partner of such important entity. Appeal allowed.

  ---

• 2019 (2) TMI 1507
  Valuation of imported goods - inclusion of royalty paid to the overseas Licensors/foreign suppliers in assessable bvalue - Rule 10(1)(c) of the Customs Valuation Rules, 2007 - difference of opinion - Held that:- As there is difference of opinion, the matter is referred to Hon ble President, to refer the matter to Third Member to determine: Whether the appeal should be allowed as held by Member (Judicial) or it should be dismissed as held by Member (Technical)?

  ---

• 2019 (2) TMI 1506
  Valuation of exported goods - fabric, made out of Spun yarn from MM Fibre MM Filament yarm W/W embroidery W/W metalized yarn w 112 cm. - EPCG DEPB Schemes - Revenue entertained a view that the goods appeared to be over-invoiced - Rule 6 of the Customs Valuation (Determination of value of Export Goods) Rules, 2007 - difference of opinion. Held that:- As there is difference of opinion, the matter is referred to Hon ble President, to refer the matter to Third Member to determine: Whether the appeals should be allowed as held by Member (Judicial) or the same should be dismissed as held by Member (Technical)?

  ---

• 2019 (2) TMI 1505
  Maintainability of appeal - non-compliance with the statutory requirement of pre-deposit - Section 129E of the Customs Act 1962 - appeal was filed beyond the condonable period provided under Section 128 of the said Act - Held that:- Section 128 of the Act deals with the provisions of filing of appeal before the Commissioner (Appeals). As per the statutory mandate, the appeal has to be filed within 60 days from the date of the communication of decision or order to the aggrieved party. In the proviso clause appended to sub-section (1) of Section 128 of the Act, it has been stated that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of 60 days, allow it to be presented within a further period of 30 days. On reading of provisions of sub-section (1) of Section 128 of the Act and the first proviso appended thereto, it reveals that the Commissioner (Appeals) is not empowered under the statute to condone the delay, if the appeal is preferred beyond 90 days from the date of receipt of the adjudication order. The time consumed between filing of writ petition and subsequent disposal thereof by the Hon’ble Allahabad High Court vide order dated 14.07.2017 should be excluded for the purpose of computation of limitation period in terms of Section 14 of the Limitation Act, 1963. After receipt of order of the Hon’ble Allahabad High Court, since the appellant had preferred appeal before the office of the Commissioner (Appeals) within a period of 90 days, such filing of appeal cannot outrightly be rejected on the ground of limitation. Thee is no merits in the impugned order, so far as it dismissed the appeal of the appellant on the ground of non-compliance of the requirements of Section 129E of the Act and filing of appeal beyond the condonable period prescribed in the statute - the matter remanded to the Commissioner (Appeals) for deciding the appeal on merits, based on the available records - appeal allowed by way of remand.

  ---

• 2019 (2) TMI 1504
  Classification of imported goods - Germinated Oil Palm Seeds - whether classified under CTH 1209 or under CTH 1207? - benefit of N/N. 21/2002-Cus dated 01.03.2002 - Held that:- By application of rule 1 of General Rules of Interpretation of Import Tariff , classification of the goods is to be done in accordance with the terms of headings and any relative Section or Chapter Notes. It is not the case of the appellant that by application of the above Rule 1, the classification as done by the revenue is erroneous but appellants are contending that the classification should have followed the exemption notification. We are not in position to agree with the said contention - appeal dismissed - decided against appellant.

  ---

• 2019 (2) TMI 1503
  Rate of Interest - appellants have challenged the order of Commissioner stating that interest should be charged from them @ 15% instead of 24% - Import of capital goods under EPCG Scheme - failure to fulfill the export obligations - recovery of the of the duty saved along with the interest due - release of attached goods - Held that:- Issue is squarely covered by the decision of Hon ble Delhi High Court in case of Rai Agro Industries Ltd, [2006 (2) TMI 191 - HIGH COURT OF DELHI], where it was held that Claim for interest, it is fairly settled, can arise either on the basis of a statute or a contract or trade usage. In the instant case, the claim for payment of duty is supported not only by the statutory provisions of Sections 28AA and 28AB, but also the terms of the statutory policy and the legal undertaking provided, by the petitioner in accordance with the same. In terms of DGFT policy circular No 9/2003 dated 22.05.2003, for licenses issued prior to the date of Circular, interest rate shall be 24% till the date of Circular and 15% from the date of Circular. Commissioner has in his order given the benefit of reduced interest rate from 13.05.2002, which is much prior to the date of issue of this circular. Hence order of Commissioner cannot be faulted on this account. In the present case the demand for interest was confirmed along with the demand for duty and hence demand of interest was made under the Customs Act, 1962. Further from the impugned order, it is quite evident that interest has to be calculated from the date of importation and not the date of issue of license. Since Commissioner has himself allowed for computation of interest from the date of importation, as claimed by the appellants we do not reason why the said issue has been agitated again in the appeal - appeal dismissed.

  ---

• Corporate Laws

• 2019 (2) TMI 1502
  Condonation of delay in filing the present appeal beyond the period of 60 days as provided under section 10F of the Companies Act 1956 - HELD THAT:- There is a merit in the contention of the learned counsel for the respondents that the dates relied upon by the appellant are not reliable. In fact, in the application for condonation of delay, the appellant himself states that copy of the impugned order dated 12.08.2014 was received by him on or before 25.08.2014. In case, copy of the order was received after 25.08.2014, the delay in filing the appeal would not be condonable. The grounds stated for seeking condonation of delay inspire no confidence. As per the application, it is claimed that appellant being the brother-in-law tried to resolve the matter out of court. It is pleaded that settlement talks between the parties ultimately failed due to the greed of respondent No.2 and hence, the appellant could not file the appeal within the statutory period. Hence, condonation of delay is sought. As noted, the grounds so stated inspire no confidence and the delay cannot be condoned on the said grounds. There is a merit in the contention of the respondents that the present appeal has been filed against the order by which the review petition filed by the appellants against the order dated 30.04.2014 was dismissed. The appellant herein seeks to also assail the original order dated 30.04.2014. Keeping in view the above conduct of the appellant and the legal position, in my opinion, no grounds are made out to condone the delay in filing the application.

  ---

• Insolvency & Bankruptcy

• 2019 (2) TMI 1501
  Corporate Insolvency Resolution Process - HELD THAT:- The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. Mr. C. Ramasubramaniam is hereby appointed as IRP, as has been proposed by the Operational Creditor. There is no disciplinary proceeding pending against the IRP as is evidenced from Form-2. The IRP is directed to take charge of the Corporate Debtor's management immediately. IRP is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed. IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of the Code. The Directors of the Corporate Debtor, its Promoters or any person associated with the management of the Corporate Debtor are/is directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 for the purpose of discharging his functions under Section 20 of the I&B Code, 2016. The Operational Creditor and the Registry are directed to send the copy of this Order to IRP with immediate effect, so that he could take charge of the Corporate Debtor's assets etc., and make compliance with this Order as per the provisions of I&B Code, 2016.

  ---

• 2019 (2) TMI 1500
  Corporate insolvency process - outstanding operational debt - Existence of dispute - HELD THAT:- Parties while entering into an agreement and even at the stage of drafting an agreement are required to pay specific attention to details particularly where the commission is payable based just on one product as it is specifically stated in Clause 3(b) of the agreement that commission shall be computed on the net sales amount as invoiced by the company to the customer. The definition clause of the agreement dated 26.12.2017 clearly points out in Clause 1(a) of the said agreement that “products “initially means PLP Duct Pipe of 40mm X 33 mm. The contention of the Operational Creditor that ‘PLP Duct Pipe’ should be construed as ‘PLB HDPE Duct’ which is sought to be denied by the Corporate Debtor obviously shows that there exists a dispute as between the parties. It is not for this Tribunal as held in Mobilox Innovations Private Limited case [2017 (9) TMI 1270 - SUPREME COURT OF INDIA] to consider whether the dispute is a bona fide dispute as applied to in the case of Companies Act, 1956 and it is enough for the Corporate Debtor to establish that there is plausible dispute in existence as between the parties. As rightly pointed out by learned counsel for the Corporate Debtor, it is required for the applicant/Operational Creditor to specify as to the date from which the debt fell due in Part-IV of the application which is not disclosed. In view of the existence of dispute, Form-5 and part IV contained therein prescribed as the format of application to be completed and filed giving all the particulars being devoid of the same, as well as the above referred to decision of Hon’ble NCLAT, this Tribunal is of the view that the petition is to be dismissed, however, without cost.

  ---

• 2019 (2) TMI 1499
  Corporate insolvency process - HELD THAT:- Corporate Debtor has conceded the agreements and addendums but has gone to say that it has been paying interest and the Financial Creditor was to clear its liabilities within a maximum period of five years and are deliberately avoiding to perform their part of obligation despite being fully aware that interest and penalty is accruing day by day - the Corporate Debtor has stated in categorical terms that they are not liable to pay to the Financial Creditor any amount till it clears the liabilities of K.K. Kohli & Brothers Private Limited (now known as SRS Automotive Components Pvt. Ltd.) for the period upto 31.03.2008 and submit proof thereof. The amount is to become due and payable on the performance of obligation undertaken by the Financial Creditor but not before that. In the petition a copy of the reply dated 06.12.2017 filed by the Corporate Debtor has been attached but no detailed explanation has been given has to how the Financial Creditor is not liable to perform its obligations. We are of the view that in the absence of performance of its own obligation the amount would not be due and payable to the Financial Creditor. As a sequel to the above discussion we find that the petitioners do not satisfy the requirements of Section 7(5) of the Code insofar as no default appears to have occurred which is to arise only after fulfilling the obligations on the part of the Financial Creditor. The default would occur only when the amount is due and payable as stated in the above paras. The petition fails and the same is dismissed. The dismissal of the petition shall not be construed as an expression of opinion on the merit of the controversy in any other proceedings.

  ---

• 2019 (2) TMI 1498
  Corporate insolvency process - HELD THAT:- Liquidator has complied with all the conditions and procedural requirements as specified under various provisions of Section 59 of the Insolvency and Bankruptcy Code, 2016 and also Regulation 3 of IBBI (Voluntary Liquidation Process) Regulations, 2017 before initiating Voluntary Liquidation Process of the Corporate Person. Shri Jayant Ranganath Deo, and two other Directors of Corporate Person by way of separated declarations even dated 22.07.2017 declared that they have made full enquiry into the affairs of the Company and have formed the opinion that the Company has no debt and that the Declaration of Solvency in the prescribed form is true and correct. All the issues relating to the affairs of the Company including shareholder's claim plus balance from liquidation proceeds stands resolved and nothing remains to be resolved in the Company. Thus we are of the considered opinion that the instant Petition/Application deserves to be allowed as prayed for.

  ---

• Service Tax

• 2019 (2) TMI 1497
  Maintainability of appeal - issue relating to Classification of services - cargo handling service or GTA Service - respondent is an association, whose members are transport operators engaged in the business of transportation of goods entrusted by the customers - Held that:- It is not in dispute that if the show cause notices culminate into an order, the appeal would lie to this Court. When the show cause notices are issued to respondent nos.2 and 3-members, the writ petition is filed by the first respondent-association and the recipients of show cause notices who are respondent nos.2 and 3. As we are not in agreement with the view taken by the High Court, in entertaining the writ petition against show cause notices, we refrain from recording any finding on contentious issues which arise for consideration. If any finding is recorded by this Court at this stage, same will prejudice either of the parties. Having regard to the contentions raised, it cannot be said that there are no factual disputes. Applicability of the circulars dated 06.08.2008 and 05.10.2015 is also in serious dispute. Further the classifiability of service rendered by a particular assessee is to be considered with reference to facts of each case depending upon nature of service rendered and the contract entered into. There cannot be any general declaration, as prayed for. We find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court. The judgment of this Court in the case of Deputy Commissioner, Central Excise Anr. v. Sushil and Company [2016 (4) TMI 987 - SUPREME COURT] also cannot be applied to the facts of the case on hand to come to the conclusion that the services rendered by the respondents will fall in the category of goods transport agency but not cargo handling service . In the aforesaid judgment, the contract was only for supply of labour and it was the specific case of the assessee that such labour was not doing any work of packing, unpacking, loading, unloading of any cargo. In view of such written contract for limited services referred above, this Court has held that such service cannot be held to be cargo handling service . The said judgment is distinguishable on facts and same cannot be applied to the case on hand. Appeal allowed.

  ---

• 2019 (2) TMI 1496
  Business Auxiliary Service - commission received from M/s. Amadeus India Pvt. Ltd. for booking of tickets through Computerized Reservation Booking System (CRBS) offered by the said company - Held that:- Issue notice on the application for stay as well as on the Civil Appeal, returnable within six weeks.

  ---

• 2019 (2) TMI 1495
  Commercial Training or Coaching or not - 1 year graduate Marine Engineering Training - Held that:- It is quite evident that the certificate issued by the institute in terms of Para 4.17 of the said DGS order is the certificate which is duly recognized by DG Shipping for all the purposes. There is no further certificate issued as has been observed the Commissioner - there is no hesitation in holding that the certificates issued are the ones recognised in law and hence, the courses conducted by the appellants in this regard fall under the exclusion category of the taxable services in the category of Commercial Training or Coaching services. Levy of service tax - Consulting Engineering Service received from abroad - reverse charge basis - Held that:- In the case of Indian National Shipowners Association vs. UOI [2008 (12) TMI 41 - BOMBAY HIGH COURT] as affirmed by the Hon’ble Supreme Court in UOI vs. Indian National Shipowners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA], it has been held that the provision of levy on reverse charge basis was available only from 18.4.2006 – after enactment of Section 66A. Prior to that there was no provision for charging service tax on reverse charge, thus in absence of any machinery provision to charge service tax though leviable could not have been collected from the appellants. The service tax on Consulting Engineering services received from abroad on reverse charge basis is leviable from 18.4.2006 onwards after allowing the deductions as held by the Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. Accordingly, for redetermination of the service tax payable on this account the matter needs to be remanded back to the adjudicating authority. Appeal allowed by way of remand.

  ---

• 2019 (2) TMI 1494
  Works contract - construction services - services provided to government projects either directly or as sub contractor - Demand of Service tax - Held that:- The Tribunal in the case of KHURANA ENGINEERING LTD. VERSUS COMMR. OF C. EX., AHMEDABAD [2010 (11) TMI 81 - CESTAT, AHMEDABAD], has held that works done by M/s. Nobletech Engineering (P) Ltd. to M/s. Kerala Water Authority and to M/s. Degremount Ltd. falling under the category of Commercial and Industrial Construction Service and Works Contracts Service are exempted from payment of Service Tax - demand cannot be upheld. Works contract - Services under the category of work contract services provided to M/s P K Thomas (Muscat Towers), Mr G Yohannan (Nandan Square) - Held that:- There is no dispute that the said services were provided during the period 2004-05 to 2006-07, i.e. prior to 01.03.2007 - Hon’ble Apex Court has in case of Larsen and Tubro [2015 (8) TMI 749 - SUPREME COURT] has held that said services became taxable from 1st June 2007 - demand cannot survive. Penalties - Held that:- For the demands upheld the contraventions of provisions of the Finance Act, 1994 leading to imposition of penalty under Section 76, 77 & 78 needs to be upheld - In case of benefit of payment of penalty and the rate of 25% was available to the appellant at the time when they had paid the Service Tax along with interest, the same benefit will continue in the present scenario - Penalties under Section 76 & 77 which relates to procedural contravention need to be upheld. Demand of interest - Held that:- For the service tax short paid, the demand for interest is upheld - For the re-quantification of the demand interest under Section 75 and penalties under Section 76, 77 & 78, the matter remanded back to adjudicating authority. Appeal disposed off.

  ---

• 2019 (2) TMI 1493
  Levy of service tax - amount received in advance - amended provisions of Section 67 read with Rule 6 of the Service Tax Rules, 1994 - Erection, Commissioning or Installation Service - disputed period from April, 2007 to March, 2008 - time limitation - Held that:- The appellant received certain advances from their customers for services to be provided. However, they did not discharge the service tax on the amount of advance as and when received, before the due date. However, it is not disputed that they were discharging the service tax as and when the service was billed - After the conclusion of the reconciliation exercise, the adjudicating authority has ordered payment of service tax in an amount of Rs. 1,36,58,701/-. This amount is in fact more than the amount of service tax demanded in the show cause notice viz Rs. 83,48,183/-. Time Limitation - Held that:- The original ST-3 return was filed on 25 April, 2008 and the revised return filed on 23 July, 2008. These returns are filed for the period October, 2007 to March, 2008. In the revised return, the amount of advance received is included. It is noted that the amount of advance to the extent of Rs. 6,64,41,935/- has been reflected in the revised return - Revenue is not justified in alleging suppression for invoking the extended period of limitation after appellant has filed the revised return including the advances - SCN hit by limitation. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1492
  Interest on delayed payment - case of appellant is that no demand has been raised in the show cause notice and there cannot be interest demand without any demand raised for the tax amount - Held that:- It is not disputed that the appellant admitted its liability of Service Tax on the amount over and above the MGM and paid the same before the issuance of show cause notice and due to which the show cause notice was issued for demand of interest only and confirmation of demand and Service Tax and appropriation of the amount paid as Service Tax was not warranted. Admittedly, there is delay in payment of Service Tax and once the duty is admitted, interest cannot be detached from the duty liability. The liability to pay interest arises when the assessee is liable to pay duty on the day which is prescribed but failed to pay the same. The liability to pay interest arises from the date, the duty is payable till the date it is paid. By such late payment or delayed payment, the Revenue is deprived of the duty. The said amount would be in possession of the assessee who would have the benefit of the said amount - It is to compensate the loss sustained by the Revenue, the interest is imposed and, therefore, the interest is payable for the period during which the Revenue is deprived of the duty, which it was legitimately entitle to and since the assessee had the benefit of the duty by not paying the duty payable on the due late. It is compensatory in nature and is imposed on the assessee who has withheld payment of any tax as and when it is due and payable. The SCN and the orders of the authorities below invoking the provision of Section 75 ibid for demanding interest is perfectly in order and is within the framework of law - Appeal dismissed.

  ---

• 2019 (2) TMI 1491
  Rectification of mistake - no error apparent on the face of record - Held that:- Upon proper analysis of the facts and considering the findings of the adjudicating authority, this Tribunal has passed the order dated 10.04.2018. Thus there is no apparent mistake on the face of the record, which can be called for rectification - the application filed by Revenue is dismissed.

  ---

• 2019 (2) TMI 1490
  Commercial or Industrial Construction Services - services of construction of women hostel for and on behalf of Ministry of Women and Child Development, Government of India - construction of Civil Services Offices Institute - Held that:- Issue notice.

  ---

• Central Excise

• 2019 (2) TMI 1489
  Misdeclaration of goods - Department observed that the respondent is mis-declaring one of the products that is Natural Gasoline Liquid (NGL) as “Naphtha” at the time of clearance from their factory premises - benefit of N/N. 18/2009/CE dated 7/7/2009 (as amended) - Held that:- Issue notice on the application for ex-parte stay as well as on the appeal, returnable in six weeks.

  ---

• 2019 (2) TMI 1488
  CENVAT Credit - input services - services of Goods Transport Agency for transportation of cement - place of removal - demand was confirmed by the adjudicating authorities holding that the credit on GTA service is available as input service only up to place of removal after 01.04.2008 in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 - issue under litigation - extended period of limitation - Held that:- The Appellants are clearing their goods on MRP basis in case of clearance from their depot/ stockists or to their customers and in case of sale to institutional consumers the goods are being cleared by them by applying valuation in terms of Section 4. The Appellant have annexed copies of excise invoice cum gate pass which shows that the prices are inclusive of freight and insurance and nothing extra has been charged. The goods are being cleared on FOR basis and all liabilities in respect of transportation of goods or damage to goods were on account of Appellants. They were liable for safe delivery of goods upto their customers doorstep. In such case when the sale of the goods is completed at the doorstep of the Customer or depot/ stockist as the case may be the point of sale shall be such doorstep. The Chartered/ Cost Accountant has certified that the goods were sold on FOR basis by the Appellant and the freight/ damages in transit was responsibility of Appellant till the goods reached the doorstep of the Customers. Also we find that the consignment notes were raised upon the Appellant and they did not charge any amount except price of the goods from the customers - as per Circular No. 1065/4/2018 CX dt. 08.06.2018, it is found that that as the ownership of the goods remained with the Appellants till the goods reached to the customer s doorstep and the freight charges as well as damage to the goods till destination were borne by the Appellants, hence they are eligible for the credit of service tax paid by them on outward freight. As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. We find force in the argument of the appellant however, since we are deciding the issue on merit, the admissibility of the Cenvat Credit on outward GTA on the basis of provision under Cenvat Credit Rules itself, we need not to deal this aspect hence, the issue related to this fact left open. Time Limitation - Held that:- The issue was not free from doubt and right from introduction of Cenvat Scheme under Cenvat Credit Rules, the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon ble High Courts and Hon ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also. The Appellants are eligible for the credit of service tax paid on outward freight - appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1487
  CENVAT Credit - service tax paid on outward transportation - place of removal - demand was confirmed by the adjudicating authority holding that the credit of GTA service is available on input service only up to place of removal after 01.04.2008 in terms of Rule 2 (I) of Cenvat Credit Rules, 2004 - issue under litigation - extended period of limitation - Held that:- The Appellant are clearing their goods on MRP basis in case of clearance from their depot/ stockists or to their customers and in case of sale to institutional consumers the goods are being cleared by them by adopting the valuation of the goods in terms of Section 4. The Appellants have annexed copies of excise invoice cum gate pass which shows that the prices are inclusive of freight and insurance and nothing extra has been charged. The goods are being cleared on FOR basis and all liabilities in respect of transportation of goods or damage to goods were on account of Appellants. They were liable for safe delivery of goods upto their customers doorstep. In such case when the sale of the goods is completed at the doorstep of the Customer or depot/ stockist as the case may be the point of sale shall be such doorstep. The Chartered/ Cost Accountant has certified that the goods were sold on FOR basis by the Appellant and the freight/ damages in transit was responsibility of Appellant till the goods reaches the doorstep of the Customers - Also, the consignment notes were raised upon the Appellant and they did not charge any amount except price of the goods from the customers. Thus, as the ownership of the goods remained with the Appellants till the goods reached to the customer’s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight. As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. We find force in the argument of the appellant however, since we are deciding the issue on merit, the admissibility of the Cenvat Credit on outward GTA on the basis of provision under Cenvat Credit Rules itself, we need not to deal this aspect hence, the issue related to this fact left open. Time Limitation - Held that:- The issue was not free from doubt and right from introduction of Cenvat Scheme under Cenvat Credit Rules, the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon’ble High Courts and Hon’ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also. The Appellants are eligible for the cenvat credit of service tax paid on outward freight - appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1486
  Excisability/movability - DG sets - immovable property or not - demand of short paid duty alongwith interest and penalty - Held that:- The duty has been demanded on the clearance of goods from the premises of the appellants and not on the act of erection of the D G Set in their premises. It is thus evident that demand of duty is not in respect of D G Set erected at the site, which becomes immovable property - Since no duty has been demanded on the D G Set which was immovable property the decision relied upon by the Appellants are not applicable in the present case. In the present case appellants have themselves effected the clearance of the said goods as is evident from the invoice No 137 dated 1.03.2000, “Items of 6 MW DG Set” and not the DG Set as such. They have also shown the value of goods cleared as Rs. 5,30,00,000/-. And the classification of the goods as per the appellants themselves is under heading 8502 of the First Schedule to Central Excise Tariff Act, 1985. When the appellants have themselves declared the goods as classifiable under Heading No. 8502, and excisable as they have paid certain excise duty on the same, they should not have any grievance with the order of Commissioner up-holding everything as declared in their invoice and clearance documents. Demand of interest made under Section 11A - Held that:- Since the differential duty in the present case became payable on determination made by Commissioner under Section 11A (2) the demand of interest is justified. Time limitation - Held that:- In this case the demand for payment of differential duty has been made within period of one year from the date of filing the returns i.e. 06.04.2000 for the clearance made vide invoice dated 1.3.2000 - the demand is not barred by limitation. Appeal dismissed - decided against appellant.

  ---

• 2019 (2) TMI 1485
  CENVAT Credit - recovery of inadmissible credit - Rule 14 of the CENVAT Credit Rules, 2004 (CCR) read with Section 11A(1) of the Act - credit of service tax paid on ‘Sole Selling Commission’ on the basis of the strength of the invoices raised by FMGIL - Held that:- As per Clause 3 of the agreement entered into between the appellant and FMGIL, FMGIL promotes the sales of the appellant by doing various activities including maintaining good relation with the customers, obtaining orders from them, providing consultation and advice and identifying prospective customers. This issue is no more res integra and has been settled in favour of the appellant in various decisions wherein it has been consistently held that sales commission falls under the definition of ‘input service’. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1484
  CENVAT Credit - input - angles, channels and other items used for support of capital goods - Held that:- The issue in question has been decided in their favour in a number of judgments - reliance placed in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT], where it has been held that Section 37 of the Central Excise Act, 1944 is a rule making power. Section 37(2)(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods - appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1483
  Clandestine removal - non-speaking order - Revenue has stated that Commissioner (Appeal) has not considered various evidences arrive while dropping the demand - variation in the consumption of electricity - Held that:- The matter was remanded back to the adjudicating authority to render a finding in respect of power consumption specifically. The respondents have made detailed submissions in this regard, however, adjudicating authority has dealt the entire submission on the issue of power consumption - For making such observations, Original Authority has relied upon the Order-in-Original which has been set aside by the Commissioner (Appeal) long back and the order of the Commissioner (Appeal) was set aside by the Tribunal and matter remanded back. It is not understood how adjudicating authority could have relied upon the findings rendered in the order which has been set aside. when the matter was remanded for re-consideration of the same. Having not been done so, the Revenue cannot be aggrieved by the order of Commissioner (Appeal). Since adjudicating authority has not rendered any finding in respect of the issue for which the matter was earlier remanded back to him. We hold that he was not in a position to give any adverse finding in this regards. We are firmly of the view that the backbone of the case made against the appellants is variation in power consumption. Since adjudicating authority has not found it fit to render any finding in this respect we draw adverse inference on it as has been done by the Commissioner (Appeal) - All the other evidences have been well considered by the Commissioner (Appeal) in his order for dropping the demands. Appeal dismissed - decided against Revenue.

  ---

• 2019 (2) TMI 1482
  CENVAT Credit - exempt goods - case of Revenue is that since LDPE pipes according to appellant are classifiable under 8424 9000 and are unconditionally exempted, the appellant assesse s option of paying central excise duty on LDPE pipes cleared to dealers is in violation of provisions of Section (1A) of Section 5(A) of Central Excise Act and CENVAT credit availed on capital goods, inputs and input services which are exclusively used in the manufacture of exempted goods needs to be reversed - Held that:- There is no dispute on the classification of the products of LDPE pipes attached with sprayer for projecting, dispersing or spraying liquids etc. under chapter 8424. The only dispute is regarding the LDPE pipes which were cleared for other than agricultural and horticultural purposes. According to appellant assessee, these LDPE pipes are cleared to their dealers for other than agricultural and horticultural purposes, would merit classification under chapter 3917 and is liable for Central Excise duty and no exemptions are available hence they have correctly availed the benefit of CENVAT credit of the duties paid on LDPE granules, input services and capital goods. The appellant assessee had been reversing 10% of the value of exempted goods cleared by them correctly so, by following the provisions of Rule 6 of CENVAT Credit Rules, 2004 - when LDPE pipes are not cleared for agricultural and horticultural purposes, appellant s claim that these products are liable to Central Excise Duty as being classifiable under chapter 39 seems to be correct proposition of the law and we accept the same. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1481
  Imposition of penalty - invocation of provisions of Rule 15(2) of the Rules read with Section 11AC of the Act - Held that:- It is an admitted fact on record that based on the Books of Accounts maintained by the appellant, the Central Excise Officers observed that the discrepancies regarding availment of irregular credit. It is not the case of Revenue that the appellant had suppressed such facts regarding availment of CENVAT Credit, which were made known to the department through external sources or otherwise - Admittedly, there is no element of suppression, mis-statement, fraud etc, on the part of the appellant in defrauding the Government revenue. Therefore, the department has wrongly invoked the provisions of Section 11A(4) of the Act, for issuance of show-cause notice and confirmation of the adjudged demand - penalty set aside - appeal allowed - decided in favor of appellant.

  ---

• 2019 (2) TMI 1480
  Jurisdiction - power of proper officer to issue demand notice - Held that:- There is no discrepancy in the aforesaid observation of the learned Commissioner (Appeals) nor any contrary evidence produced by the Appellant. Also, on going through the show-cause notice, we find that it was issued on the basis of the investigation carried out by Pune-II Commissionerate and also the reply has been filed by the appellant to the Additional Commissioner, Pune-II Commissionerate, therefore, the demand notice was properly issued by the proper officer who has been authorized and it is valid. Imposition of penalty - allegation of the Revenue is that while considering the landed cost of free issue material, for the purpose of valuation, the appellant M/s SPM Tools has failed to consider the entire value of the free issue material used by them in the manufacture of finished goods on which the appellant discharged duty on clearing the same to M/s KFPL - Held that:- The appellant M/s SPM Tool Pvt. Ltd. were fully aware of the fact that the total landed cost of free issue material ought to be considered while determining the assessable value and the duty at the time of clearance of the goods be determined on the total value, but suppressed the correct assessable value by taking into consideration a part of the value of the free issue material. Hence, in our opinion, the plea of the appellant that it was a bona fide mistake on the part of the appellant cannot be acceptable - the authorities below are justified in imposing penalty equivalent to the duty under Section 11AC of Central Excise Act, 1944 and the case of the appellant falls under the exclusion clause i.e. Explanation (1) of Section 11A(2B) of Central Excise Act, 1944. Benefit of reduced penalty - Held that:- The appellant has paid the entire amount of differential duty with interest before issue of show-cause notice, therefore, they are eligible to discharge 25% of the penalty in accordance with Section 11AC of the Central Excise Act, 1944. The impugned order is modified to this extent of extending 25% of the penalty amount. CENVAT Credit - duty paying invoices - supplementary invoices - Held that:- The learned Commissioner (Appeals) has not decided the issue on merit but set aside the adjudication order denying benefit of CENVAT Credit on supplementary invoices issued by M/s SPM Tools in favour of respondent M/s Fuel Instrument Engineers Pvt. Ltd. on the ground that it was premature since the charge of suppression against M/s SPM Tool was not decided - matter remanded to the adjudicating authority to decide the issue of admissibility of CENVAT Credit on the supplementary invoices issued by M/s SPM Tools. Appeal allowed in part and part matter on remand.

  ---

• 2019 (2) TMI 1479
  CENVAT Credit - common input services were used in the repair and maintenance of windmill situated away from their factory during the period March, 2015 to May, 2015 - non-maintenance of separate account of use of common input services - Rule 6 of CENVAT Credit Rules, 2004 - Held that:- Applicability of Rule 6 of the CENVAT Credit Rules, 2004 squarely rests on the fact that whether the appellant availed CENVAT Credit on input services and used it for providing exempted services - In the present case, demand notices have been confirmed on the premise that the appellant have utilized common input services in the manufacture of dutiable goods and maintenance and repair of windmill. The learned Commissioner (Appeals) categorically recorded the findings that the appellant failed to produce evidence to substantiate that credit availed on input services were not used exclusively in repair and maintenance of Wind Mills used for generation of electricity, which the appellant controverted before this Tribunal placing evidences. I am of the view that these evidences need to be scrutinized since not produced before the adjudicating authority. Appeal allowed by way of remand.

  ---

• 2019 (2) TMI 1478
  Valuation - interconnected undertakings - related party transaction or not - respondent had been supplying ‘steel ingots’ to M/s. Orange City Alloys Pvt Ltd - rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Held that:- In the present instance, the definition of related person, though including interconnected undertaking, as found by the appellate authority is not admitted and certainly does not extend to the valuation provision invoked in the show cause notice. The reviewing authority appears to have omitted to consider the substantial difference between rule 9, which is applicable in certain conditions of relationship, and rule 10 which is applicable circumstances in which the relationship between the buyer and the seller is solely between the interconnected undertakings. The finding that the two not being ‘interconnected’ with consequent exclusion from liability to duty under the Rules is legal and proper - appeal of Revenue dismissed.

  ---

• CST, VAT & Sales Tax

• 2019 (2) TMI 1477
  Compounding rate of tax - section 8A of KVAT Act - principles of natural justice - Held that:- The record submitted, the first Intelligence Officer might not have acted immediately. That inaction, I am afraid, cannot be regarded as his getting satisfied with the petitioner’s explanation. That satisfaction, if any, must translate into some concrete measure: an order by the Intelligence Officer, say, resulting in the closure of the proceedings. That has not happened. On the contrary, the successor Intelligence Officer simply proceeded with the matter from where it had been left. She, in fact, issued notice and proceeded further. So the replacement of one officer with another does not lead to any disruption in adjudication. The proceedings are deemed to have been continued - Then the petitioner's counsel has also, on merits, insisted that the second respondent has not considered the petitioner's books of accounts and other materials the petitioner produced. If that were so, it would not amount to the second respondent’s violating the principles of natural justice. It is then, at best, a shortcoming on merits. The petitioner has an efficacious alternative remedy, and must approach the appellate authority - petition dismissed.

  ---

• 2019 (2) TMI 1476
  Imposition of penalty - sales tax liability on sale of rubber trees - assessment year 1996-97 - KGST Act - Held that:- The assessee having collected the tax the same has to be paid over to the State as per Section 22 of the KGST Act and Rule 18(3) of the KGST Rules. The same having not been done, penalty proceedings initiated against the assessee was perfectly in order. The assessee had also filed an incorrect return insofar as the tax collected having not been shown in the records. The proceedings hence was under Section 45A, where the penalty could extent to twice the amount of tax sought to be evaded. The assessee had not paid over the tax to the State despite collecting. The deposit in lieu of tax was a device employed to deprive the State of the tax; when already collected by the seller. If at all the assessee was absolved from such liability there could have been a refund sought either by the assessee or by the person who suffered tax; producing evidence of refund having been made to the purchaser and in the latter case producing evidence of payment of tax having been effected. There can be no further modification on the quantum of the penalty - appeal dismissed.

  ---

• 2019 (2) TMI 1475
  Validity of assessment order - reopening of assessment - levy of VAT - errors in the Form WW - section 84 of the Tamil Nadu Value Added Tax Act, 2006 - Held that:- The petitioner in this case has all along been appearing before the authorities and appears to be co-operating in the completion of the assessment. No doubt some adjournments have been sought but the reasons adduced for the seeking of the same do not give me the impression that the petitioner was purposely delaying the proceedings. The issue in respect of which details have been sought, being the reconciliation of sales and purchase figures, is a technical one, and one calling for the assistance of a professional. The reason for the non-availability of the Chartered Accountant is also a legitimate one, as seen from the letter of the petitioner dated 20.11.2018 stating that the CA had rushed to Vedaranyam to attend to the devastation caused in the wake of the Gaja cyclone. The petitioner has approached the Assessing Authority with a petition for rectification under section 84 though styled as a petition for 'reopening of assessment' and enclosing details in support of its stand that the sales and purchases were, in fact, reconciled. The rejection of this petition by the respondent quoting the provisions of Section 51(1) relating to appeal is hyper technical and not proper. The prayer specifically requests ‘rectification’ and there appears no doubt in my mind that the petition is one filed in terms of the provisions of Section 84 of the Act. The Assessing Officer is directed to take up for hearing petition dated 31.01.2019 under Section 84 of the Act, afford due opportunity to the assessee and dispose the same in accordance with law - petition dismissed.

  ---

• 2019 (2) TMI 1474
  Validity of assessment order - Tamil Nadu Tax on Luxuries Act, 1981 - period 2014-15 - Held that:- The assessee shall appear before the Assessing Authority at the first instance on 19.02.2019 at 10.30 a.m. along with all materials in support of its returns of turnover. Orders shall be passed by the Assessing Officer within a period of one (1) month from the date of conclusion of the personal hearing - The assessment is set aside - petition disposed off.

  ---

• 2019 (2) TMI 1458
  Maintainability of revision petition under Section 58 of the VAT Act, 2008 - waiver of statutory deposit - appeal of the petitioner is still pending before the Commercial Tax Tribunal and it is only the application for waiver which has been disposed of - Held that:- This Court finds that the observation in the impugned order that the merits of the case is not required to be considered while disposing the application for waiver of the statutory deposit is not in tune with the Division Bench judgment referred by Shri Agarwal in ITC. LTD. VERSUS COMMISSIONER (APPEALS), CUS. & C. EX., MEERUT-I [2003 (10) TMI 70 - HIGH COURT OF JUDICATURE AT ALLAHABAD] - The Court has perused the said judgment and finds that the matter requires reconsideration by the Tribunal taking the said judgment into consideration which has not been done as yet. The impugned order is hereby quashed - application for waiver of the statutory deposit filed by the petitioner under Clause (b) of the second proviso of Section 57 sub-section 2 of the VAT Act, 2008 shall now be revived, reconsidered and decided by the Tribunal - petition allowed.

  ---

• Indian Laws

• 2019 (2) TMI 1473
  SEZ Unit - Goods imported/procured by the respondent for authorized operations - Withdrawal of exemption of all duties under the Customs Act, Customs Tariff Act, Central Excise Act, etc. vide notification dated 06.04.2015 - PPAs dated 07.08.2008 and 02.02.2007 - inclusion of cost by way of payment of tax consequent to withdrawal of the exemption notifications - Held that:- A reading of Article 13 of PPA as a whole leads to the position that subject to restitutionary principles contained in Article 13.2, the adjustment in monthly tariff payment, in the facts of the present case, has to be from the date of the withdrawal of exemption which was done by administrative orders dated 06.04.2015 and 16.02.2016. The present case, therefore, falls within Article 13.4.1(i). This being the case, it is clear that the adjustment in monthly tariff payment has to be effected from the date on which the exemptions given were withdrawn. This being the case, monthly invoices to be raised by the seller after such change in tariff are to appropriately reflect the changed tariff. On the facts of the present case, it is clear that the respondents were entitled to adjustment in their monthly tariff payment from the date on which the exemption notifications became effective. This being the case, the restitutionary principle contained in Article 13.2 would kick in for the simple reason that it is only after the order dated 04.05.2017 that the CERC held that the respondents were entitled to claim added costs on account of change in law w.e.f. 01.04.2015. This being the case, it would be fallacious to say that the respondents would be claiming this restitutionary amount on some general principle of equity outside the PPA. Since it is clear that this amount of carrying cost is only relatable to Article 13 of the PPA, we find no reason to interfere with the judgment of the Appellate Tribunal. The restitutionary principle contained in Clause 13.2 must always be kept in mind even when compensation for increase/decrease in cost is determined by the CERC. Appeal dismissed.

  ---