TMI Tax Updates - e-Newsletter
February 6, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Central Excise Indian Laws

Articles

1. TDS from sale and / or services can be applied in case of all type of supply and services instead of so many TDS/TCS provisions at present and proposed. Advance tax, instead of TDS/ TCS is better option in case of organized payees.

   By: DEVKUMAR KOTHARI

2. HEALTH CESS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Budget 2020 - Modification of residency provisions- amendment of S. 6 of the Income-tax Act, 1961

   By: DEVKUMAR KOTHARI

News

1. Promoting Quality Standards

2. Vizag-Chennai Industrial Corridor

3. Industrial Parks in India

4. Regulation of Online Retailers

5. CBDT issues clarification on the applicability of TDS provisions on Mutual Fund dividend

Notifications

Customs

1. F. No. 334/2/2020-TRU - dated 4-2-2020 - Cus

Corrigendum – Notification No. 05/2020-Customs, dated the 2nd February, 2020

2. 14/2020-Customs (N.T./CAA/DRI) - dated 3-2-2020 - Cus (NT)

Appointment of CAA by DGRI

3. 13/2020-Customs (N.T./CAA/DRI) - dated 3-2-2020 - Cus (NT)

Appointment of CAA by DGRI

4. 12/2020-Customs (N.T./CAA/DRI) - dated 3-2-2020 - Cus (NT)

Appointment of CAA by DGRI

5. 11/2020-Customs (N.T./CAA/EXTENSION/DRI) - dated 3-2-2020 - Cus (NT)

Appointment of CAA by DGRI

GST

6. F.No.20/06/07/2019-GST - dated 4-2-2020 - CGST

Corrigendum - Notification No. 06/2020-Central Tax, dated the 03rd February,2020

GST - States

7. CCTs Ref.no CCW/GST/74/2015 - dated 10-1-2020 - Andhra Pradesh SGST

Time Period for furnishing the returns in FORM GSTR -3B and discharging of tax liability thereon – Amendment to the proceedings, Dated 17.10.2019

8. 19/2019 - KGST.CR.01/17-18 - dated 24-12-2019 - Karnataka SGST

Seeks to amend Notification (17/2019) No. KGST.CR.01/17-18, dated the 11th October, 2019

Circulars / Instructions / Orders

SEBI

1. IMD/FPI&C/CIR/P/2020/022 - dated 4-2-2020

Common Application Form for Foreign Portfolio Investors

2. SEBI/HO/CDMRD/DNPMP/CIR/P/2020/21 - dated 4-2-2020

Performance review of the commodity derivatives contracts

DGFT

3. Trade Notice No. 48/2019-20 - dated 4-2-2020

One-time permission for resubmission of applications for claiming assistance under `Transport and Marketing Assistance (TMA) for Specified Agriculture Products’ Scheme

Customs

4. 08/2020 - dated 5-2-2020

Procedure for a Pilot on Transhipment of Export Cargo from Bangladesh to third countries through Land Customs Stations (LCSs) to Kolkata Port / Airport, in containers or closed bodied trucks

Highlights / Catch Notes

GST

• Court Orders Release of Petitioner's Goods Without Tax or Penalty Due to E-way Bill Discrepancy u/s 129(1)(c.

  Case-Laws - HC : Release of petitioner goods without collecting any tax or penalty or security u/s 129(1)(c) - discrepancy in E-way bill - The goods and vehicle directed to be released forthwith on his executing a simple bond and without insisting on the petitioner furnishing bank guarantee for the demanded value
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• Court Issues Notices to Infosys and Tech Mahindra Over GSTR 9C Portal Glitches for FY 2017-18.

  Case-Laws - HC : Filing of annual returns - uploading of annual returns in GSTR 9C Form, which are filed by the assessees for the financial year 2017-18 - apparent technical flaws, glitches and limitations in the online portal system evolved by GSTN - Court Notices issued to Infosys Limited and Tech Mahindra Limited
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• Court Supports Refund of Unutilized CENVAT Credit for Zero-Rated Supplies Despite Circular Restrictions Across Financial Years.

  Case-Laws - HC : Refund of unutilized CENVAT credit - zero rated supplies - clubbing of successive calendar months/quarters across different financial years - the petitioner has a strong prima facie case, and we cannot deny the petitioner of its right to claim refund which is visible from the mechanism provided under the Act. The impugned circulars take away the vested right of the taxpayer that has accrued in the relevant period.
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Income Tax

• Assessee's Challenge u/s 153A Moot as No Additions Made in Re-assessment Proceedings.

  Case-Laws - HC : Assessment u/s 153A - assessee challenged the assessment order - absence of any incriminating material - the aforesaid submission is completely academic and need not be gone into since no additions were made even by the Assessing Officer in the re-assessment proceedings
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• Tribunal Confirms Findings on Undisclosed Purchases, Excess Book Stock Due to Assessee's Admission of Unrecorded Transactions.

  Case-Laws - HC : Undisclosed purchase - purchases were not properly entered - there was “Excess Book Stock” as compared to “Physical Stock - We do not find any perversity in the said findings of the learned Tribunal based on the admission of the Assessee himself
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• Court Debates Depreciation on Goodwill; Questions Motive Behind Rs. 45.48 Crore Payment for Rs. 10.93 Crore Benefit.

  Case-Laws - AT : Disallowance of depreciation on goodwill - We do not concur with the observations of the DRP that the assessee, with the motive of reducing profits in form of depreciation, had entered into this transaction. In our considered view, no prudent business man would pay a sum of ₹ 45.48 crores to claim depreciation of ₹ 10.93 crores over a period of five years
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• Assessee Permitted to Change Accounting Method for Project Management Expenses u/s 37.

  Case-Laws - AT : Disallowance of project management expenses claimed u/s 37 - Change in method of accounting in respect of project management expenses - assesee was well within its right to change method of accounting for accounting particular expenditure.
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• Taxpayer's Weighted Deduction Under Sec 35(2AB) Limited by DSIR; CIT(A) Directs AO to Adjust Deduction Accordingly.

  Case-Laws - AT : Weighted deduction u/s 35(2AB) - the entire claim of weighted deduction claimed by the assessee cannot be acceded to over and above the restriction made by the DSIR. CIT(A) has rightly directed the Assessing Officer to allow the correct amount of deduction u/s 35(2AB) after taking note of the DSIR certificate
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• Court Accepts Assessee's Explanation for Cash Deposit as Sale Proceeds and Cash on Hand, Validating Transaction Legitimacy.

  Case-Laws - AT : Addition on the basis of the crediting of cash in the bank account - assessee having deposited the amount out of the sale proceeds of the closing stock held by him and out of cash in hand - the explanation of the assessee regarding this deposit of cash was correct.
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• CIT(A) Allows 6% Gross Profit Estimate on Alleged Non-Genuine Purchases, Permits Deductions for Declared Profits.

  Case-Laws - AT : Bogus purchases - GP Estimation on bogus purchases - CIT(A) was right in estimating 6% gross profit on alleged non genuine purchases and further allowed deductions towards gross profit already declared by the assessee for the relevant period .
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• Assessee's Reconciliation Statements Sufficient for Discrepancy in Receipts; No Impossible Demands Allowed Under AS-26.

  Case-Laws - AT : Difference in receipts shown as per books of accounts and as per AS-26 - assessee has submitted the reconciliation statements as well explaining the reasons for difference - The assessee has discharged its primary onus/burden and the assessee could not be asked to do impossible.
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Central Excise

• CENVAT Credit Approved for Marketing-Related Rent Expenses u/r 2(l) of Cenvat Credit Rules.

  Case-Laws - AT : CENVAT Credit- input services - “renting of immovable property” outside the manufacturing unit - place of removal - appellant was using the rented premises for “marketing” purposes which is in conformity to Rule 2(l) of Cenvat Credit Rules that clearly covers “advertisement or sales promotion” within the definition of input services. - Credit allowed.
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• CENVAT Credit Denial Over Invoice Name Issue Deemed Unjustifiable by Court Decision.

  Case-Laws - AT : CENVAT Credit - duty paying invoices - the denial of credit for the sole reason that the invoices issued by the service provider were not in the name of the appellant who was the availing credit is not justifiable.
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Case Laws:

• GST

• 2020 (2) TMI 171
  Release of petitioner goods without collecting any tax or penalty or security under S.129(1)(c) - discrepancy in E-way bill - HELD THAT:- The matter in relation to the detention of the goods as per the impugned Ext.P7 proceedings will have to be subjected to adjudication proceedings and only thereafter it can be finalised. Therefore, this Court need not make any final pronouncement on any of the above said issues. It is for the petitioner to raise all those contentions as and when he is given opportunity of hearing prior to the finalisation of the adjudication proceedings pursuant to the detention proceedings referred to in Ext.P7. The respondents do not have any case that the petitioner concern has any previous adverse records of tax evasions of non-compliance of the tax laws. The above said contentions raised by the petitioner on the basis of Ext.P2 E-Way bill is substantially strong to persuade this Court that the goods could be released on condition that the petitioner executes a simple bond in that regard. Hence, it is ordered that the 1st respondent shall immediately release the goods and vehicle detained pursuant to Ext.P7 order to the petitioner on the petitioner executing a simple bond in that regard. However, the 1st respondent will be at liberty to proceed further with the adjudication proceedings in relation to Ext.P7 order and for that purpose, notice of hearing may be given to the petitioner and the petitioner should be permitted to give detailed written submissions in the matter. It is ordered that all the contentions raised by the petitioner herein and any of the contentions that may be raised by the petitioner before the 1st respondent should be duly adverted to and considered by the 1st respondent before he passes orders finalising the adjudication proceedings in that regard. It is ordered that the goods and vehicle detained pursuant to Ext.P7 shall be released forthwith by the 1st respondent to the petitioner, on his executing a simple bond and without insisting on the petitioner furnishing bank guarantee for the demanded value - the 1st respondent will take necessary action to comply with the other directions for the finalisation of the adjudication proceedings pursuant to Ext.P-7. Petition disposed off.

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• 2020 (2) TMI 170
  Filing of annual returns - uploading of annual returns in GSTR 9C Form, which are filed by the assessees for the financial year 2017-18 - apparent technical flaws, glitches and limitations in the online portal system evolved by GSTN - extension of date of filing of returns - HELD THAT:- Infosys Limited and Tech Mahindra Limited have been entrusted the task of evolving and maintaining the GSTN Network for IT support. With a view to better appreciate the intricacies, and to ensure that the grievances raised by the taxpayers whose interest the petitioner association represents and our orders are understood and implemented in true perspective, we consider it necessary to have Infosys Limited and Tech Mahindra Limited present before us, to receive their assistance, as and when required. Court Notices to be issued to Infosys Limited and Tech Mahindra Limited in the aforesaid context - Let court notice issue to them returnable on 20.02.2020.

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• 2020 (2) TMI 169
  Refund of unutilized CENVAT credit - zero rated supplies - clubbing of successive calendar months/quarters across different financial years - Section 16(1)(a) of the Integrated Goods and Services Tax Act, 2017 - validity of Circular No.37/11/2018-GST dated 15.03. 2018 and Circular No. 125/44/19-GST dated 18.11.2019 - period from November, 2017 to June, 2018 - HELD THAT:- By way of the impugned circulars, though the respondents recognise the difficulties faced by the exporters and have permitted them to file refund claim for one calendar month/quarter or by clubbing successive calendar months/quarters, yet the restriction pertaining to the spread of refund claim across different financial years is arbitrary. There is no rationale or justification for such a constraint. In the instant case, where exports are not made in the same financial year, question arises as to whether Respondents can restrict the filing of the refund for tax periods spread across two financial years and deprive the petitioner of its valuable right accrued in his favour. In exports, availability of the rotation of funds is essential for the business to thrive. Moreover, businesses do not run according to the whims of the executive authorities. The business world cannot be told when to place orders for exports; when to manufacture the goods for export; and; when to actually undertake the exports. Respondents impugned circulars have thus blocked the capital of the petitioner and the unutilised ITC and it has accumulated huge amount of unutilised ITC to the tune of Rs. 30 crores. Merely because the petitioner made exports in the month of June, 2018, we do not see any justification to deny the refund of the ITC which have accumulated in the previous financial years. The Respondents cannot, artificially by acting contrary to the fundamental spirit and object of the law, contrive ways to deny the benefit, which the substantive provisions of the law confer on the tax payers. Thus, the petitioner has a strong prima facie case, and we cannot deny the petitioner of its right to claim refund which is visible from the mechanism provided under the Act. The impugned circulars take away the vested right of the taxpayer that has accrued in the relevant period. Respondents are directed to process the petitioner s claim in accordance with law once the tax refund is filed - petition allowed by way of remand.

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• 2020 (2) TMI 168
  Maintainability of petition - alternative remedy of appeal - transitional credit - time limitation - HELD THAT:- The petitioner has an equally efficacious alternative remedy of preferring an appeal under the provisions of Bihar Goods and Services Tax Act, 2017. The issue of limitation shall not come in the way of the petitioner, if, as mutually agreed upon, the appeal is preferred on or before 18.02.2020. Petition disposed off.

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• Income Tax

• 2020 (2) TMI 167
  Exemption u/s 11 - whether assessee is a charitable association and is eligible for deduction u/s 11? - whether activity carried out by the assessee is in the nature of running Coaching Classes or Center and therefore the benefit of Section 11 cannot be extended to the respondent? - HELD THAT:- As decided in own case [ 2018 (4) TMI 197 - BOMBAY HIGH COURT] this objection/grievance of the Revenue has been taken up for the first time across the bar. There is no such objection taken before the authorities by the Revenue. Besides, nothing has been shown to us why it should be considered as a coaching class. The impugned order of the Tribunal has only applied the decision of this Court in Samudra Institute of Maritime Studies Trust [ 2014 (9) TMI 575 - BOMBAY HIGH COURT] to conclude that the activities which are run by the respondent-institute is an educational activity and not in the nature of running a Coaching Center or a Class. The Revenue is not able to point why it would not apply. We may also point out that the grant or refusal to grant exemption under Section 10(22) and/or (23C) of the Act cannot govern the application of Section 11 of the Act. In any case, we are informed that no appeals in respect of Section 10(22) and/or (23c)(vi) of the Act are pending disposal. No substantial question of law.

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• 2020 (2) TMI 166
  Condonation of delay - delay of 3389 days - reasonable cause of delay - HELD THAT:- Tribunal has returned a clear finding that no sufficient cause was shown by the appellant to explain the huge delay. Period of delay is a factor to be considered while considering a delay condonation application; but more importantly it is the explanation for the delay which is relevant. We are not inclined to interfere with the impugned order passed by the Tribunal. Appeal is devoid of merit and is accordingly dismissed.

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• 2020 (2) TMI 165
  Income from other sources OR Long term capital gain - tenancy rights - surrender of rights by the assessee vis-a-vis the property - assessee submits that he was the tenant of the property in question - whether the property in question was under the occupation of the tenant i.e. the present assessee? - HELD THAT:- We feel that the stand taken by the revenue authorities in respect of the land in question vis-a-vis tenancy of the assessee is not justified. The assessee had disclosed the amount of Rs. 50 lakhs received from M/s. Carlton Coats Pvt. Ltd. for settlement of its claim to the property and had further disclosed that the said amount was invested in capital bonds. Thus the said amount was received by the assessee as long term capital gains in view of surrender of rights by the assessee vis-a-vis the property in question. In the circumstances, merely on the basis of suspicion, the revenue authorities ought not to have rejected the claim of the assessee that the said amount was received as long term capital gains but to treat the said amount as income from other sources . Substantial question of law as framed above is accordingly answered in favour of the assessee

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• 2020 (2) TMI 164
  Computation of deduction u/s.80HHC - Whether Tribunal correctly held that 90% of gain on derivative products and gain on interest rate swap on derivative instruments should be excluded from the profits of the business for the purpose of computation of deduction - as submitted that the Assessee did not earn any income on the gain on derivative products and gain on interest swap on derivative instruments, as discussed by the learned Tribunal - HELD THAT:- Contention sought to be raised by the Assessee before this Court now does not appear to have been raised before the learned Tribunal in the manner it has been raised before this Court and the facts and details of the reduction of interest liability on account of change of contract with the lending financial institutions from Foreign currency Fixed Interest Loan to Foreign currency Floating Interest rate has not been discussed by the learned Tribunal in the impugned order. Tribunal, being the final fact finding body, has to be recorded its independent findings facts and then only apply the law applicable to such facts. We do not find any such discussion on this aspect of the matter by the learned Tribunal. We are inclined to remand the matter back to the learned Tribunal without answering the aforesaid question of law, as quoted above.

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• 2020 (2) TMI 163
  Assessment u/s 153A - assessee challenged the assessment order before the DCIT. CIT (A) held that that since no additions were made as a result of issuance of notice under Section 153C read with Section 153A, the re-assessment order passed by the Assessing Officer was infructuous and was consequently cancelled - HELD THAT:- Revenue does not dispute the fact that no additions were made in the re-assessment proceedings. However, submits that the finding returned by the CIT (A) which has been upheld by the Tribunal to the effect that the re-assessment proceedings should have been dropped, is contrary to the observation made by this Court in CIT Vs. Kabul Chawla, [ 2015 (9) TMI 80 - DELHI HIGH COURT] wherein it observed that in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. In our view, the aforesaid submission of Mr. Bhatia is completely academic and need not be gone into since no additions were made even by the Assessing Officer in the re-assessment proceedings - Decided against revenue.

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• 2020 (2) TMI 162
  Difference between deferred sales tax liability and its Net present value - HELD THAT:- Tribunal in the impugned order while deciding the question regarding difference between deferred sales tax liability and its Net present value has opined against the Appellant revenue following the decision of this Court in case of CIT v. Sulzer India Ltd. [ 2010 (11) TMI 728 - ITAT, MUMBAI ] . The learned Counsel for the Appellant has fairly brought to our notice decision of the Supreme Court in the case of Commissioner of Income Tax-6, Mum. vs. Balkrishna Industries Ltd .[ 2 017 (11) TMI 1626 - SUPREME COURT ] to point out that the question raised would stand covered against the Appellant revenue and the decision of this Court in CIT vs Sulzar is affirmed by the Supreme Court in this decision. In the circumstances, no substantial question of law arises.

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• 2020 (2) TMI 161
  Maintainability of appeal at High Court of Karnataka, Bengaluru - order in ITA passed by Income Tax Appellate Tribunal at Ahmedabad - HELD THAT:- Revenue has called in question passed by the Income Tax Appellate Tribunal A Bench, Ahmedabad [ 2019 (1) TMI 1594 - ITAT AHMEDABAD] for the assessment year 2008-2009. As this Court does not possess appellate jurisdiction as well as supervisory jurisdiction, examining the correctness and legality of the order passed by ITAT does not arise. Office objection is sustained. Appeal is held as not maintainable and accordingly dismissed as not maintainable. Registry is directed to return the certified copy of order passed by ITAT on same being substituted by photocopy and appellants would be at liberty to file fresh appeal before the jurisdictional High Court within an outer limit of eight (8) weeks from today.

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• 2020 (2) TMI 160
  Maintainability of appeal at High Court of Karnataka, Bengaluru - order in ITA passed by ITAT at Mumbai Bench - HELD THAT:- Revenue has called in question order [ 2019 (3) TMI 1713 - ITAT MUMBAI] - As this Court does not possess appellate jurisdiction as well as supervisory jurisdiction, examining the correctness and legality of the order passed by ITAT does not arise. Office objection is sustained. Appeal is held as not maintainable and accordingly dismissed as not maintainable. Registry is directed to return the certified copy of order passed by ITAT on same being substituted by photocopy and appellant would be at liberty to file fresh appeal before the jurisdictional High Court within an outer limit of eight (8) weeks from today. It is made clear that time spent by the appellant before this Court from the date of filing of this appeal i.e., 19.08.2019 till date of filing of appeal before the jurisdictional High Court, shall stand excluded for the purposes of limitation.

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• 2020 (2) TMI 159
  Undisclosed purchase - purchases were not properly entered - there was Excess Book Stock as compared to Physical Stock - HELD THAT:- As recorded in the books , no question of law arises in the present case, much less substantial question of law, giving rise to the maintainability of the appeal under Section 260A, by the Assessee. The admission on the part of the Assessee was the best evidence to be used by the Assessing Authority in the present case. Admittedly, during the course of survey, the discrepancies in the stocks of gold were found at the business place of the Assessee for which initially though he admitted a difference of Rs. 50 lakhs in value, but later on during the course of assessment proceedings, he seems to have reduced that valuation by the admission letters dated 7 March 2005 and 17 February 2006, to the extent of Rs. 42 lakhs. The Tribunal has upheld the admissions only to the extent of Rs. 42 lakhs in the present case. We do not find any perversity in the said findings of the learned Tribunal based on the admission of the Assessee himself and therefore, we do not find any merit in the appeal filed by the Assessee and the same deserves to be dismissed.

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• 2020 (2) TMI 158
  Assessment u/s 153A - AO s power to reassess returns of assessee for undisclosed income, which was found during search operation And with regard to material that was available at time of original assessment - Addition of Reduction of value of stock/inventory on account of brokerage and compensation - assessee failed to substantiate the above expenses u/s.37(1) either at the assessment stage or at the appellate stage - HELD THAT:- . Since in the present case both the above additions are admittedly made during the course of inquiries at assessment stage under section 153A and original assessment was already completed on 25.07.2009 by proceeding the return under section 143(1), therefore, issue is covered by Judgments of Hon ble Delhi High Court in the case of CIT vs., Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Pr. CIT vs., Meeta Gut Gutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] . The Departmental appeal stand dismissed.

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• 2020 (2) TMI 157
  Disallowance of bad debts - advance paid for purchase of computer software - as per assessee since assessee could not get any response from the party, the advance had to be written off and since it is a trade debt, it has to be allowed as a bad debt - HELD THAT:- We agree with the findings of CIT(A) that within 3 days, the assessee could not have treated the payment as a bad debt. The assessee s contention that it did not receive any reply from the party and therefore, it has been treated as a bad debit, cannot be accepted. Even if it is to be allowed as business expenditure, necessity of the payment needs to be considered. The assessee s counsel had filed additional evidence in the form of copies of the orders of civil courts wherein assessee had filed civil suit against this party for recovery of advance paid along with interest to demonstrate that this party did exist. However, on going through the same, we find that the order of the civil court was ex-parte the said party and therefore, the decrees have been passed in favour of the assessee. Admittedly, both the AO and CIT(A) are not doubting the payment made to the said party. Since the assessee has not received the product, for which it has made payment, the assessee cannot be held liable. Since the authorities have not established that the assessee has received the money back, thus, the finding of the CIT(A) that it is diversion of income or application of income is not established with evidence. However, in the interest of justice, we are inclined to admit the additional evidence filed by the assessee and remand to the AO to examine the genuineness of the transaction and if the payment is found to be genuine, only then, the same may be allowed. TDS u/s 195 - parties to whom the payments have been made are foreign parties - HELD THAT:- Payments made to foreign parties in foreign exchange. AO has not questioned the genuineness of the transactions, but, disallowed it only on the ground that no TDS was made by the assessee. It is the CIT(A), who brought out that the genuineness of the transaction and the purpose of payments, is not established. Since the payments were made to the foreign parties, the provisions of section 195 would apply to the transaction. The powers of CIT(A) are coterminous with that of AO and he could do what the AO has not done. Even, the CIT(A) though has observed that it is to be disallowed u/s 195 has not brought out as to the income portion, on which, tax is to be levied in India. The case of the assessee is that the services are to be rendered outside India and since the foreign parties have no PE in India and the services are rendered outside India, section 195 would not apply. Since these factors have not been considered by the AO and CIT(A), we deem it fit and proper to remand the issue to the file of the AO for verification AY 2013-14 - violation of provisions of section 40(a)(ia) and 195 - We find that out of 9 parties, one of the party is Indian party i.e. Hemendra of Rs. 33,32,920/- and, therefore, to such transaction, the provisions of section 40(a)(ia) are clearly applicable. Since all other parties are non-residents, the provisions of section 40(a(ia) would not apply. As regards the provisions of section 195 and genuineness of the advances, we have already set aside similar issue to the file of AO for AY 2012-13 (supra) and with similar directions, this issue is also set aside to the file of AO for re-adjudication in accordance with law after giving fair opportunity of hearing to the assessee.

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• 2020 (2) TMI 156
  TP Adjustment - rendition of services by the AE to the appellant company - HELD THAT:- Lower authorities erred in questioning the need and benefit arrived by the assessee from payment in respect of availing of services from its AE. All that is required to be seen is as to whether there was actual rendition of services or not. We have carefully gone through the emails and invoices placed in the paper book vis a vis TSA Agreement. In our considered opinion, these documentary evidences clearly show the rendition of services by the AE to the appellant company. Moreover, the TPO himself has accepted the fees received by the assessee from rendering these services. We fail to understand why the payments have been subjected to different treatments. Hon ble High Court of Delhi in the case of EKL Appliances [ 2012 (4) TMI 346 - DELHI HIGH COURT] has held that the TPO does not have power to adjudicate the allowance/disallowance of expenditure incurred by the assessee thereby demolishing the need and benefit derived by the assessee.- Decided in favour of assessee Disallowance of depreciation on goodwill - main reason for dismissing the claim of depreciation by the Assessing Officer is that in none of the valuation reports, good will has been separately mentioned - HELD THAT:- Carefully gone through the valuation reports mentioned elsewhere, which are part of the paper book filed before us. It is true that in none of the valuation reports, goodwill has been separately valued. But it is equally true that the assessee has paid consideration over and above the fair value of the assets of Amex. In our considered opinion, differential amount represents payment towards goodwill. We do not concur with the observations of the DRP that the assessee, with the motive of reducing profits in form of depreciation, had entered into this transaction. In our considered view, no prudent business man would pay a sum of Rs. 45.48 crores to claim depreciation of Rs. 10.93 crores over a period of five years, not to mention that the Amex have confirmed that they have paid capital gain tax on the consideration paid by the assessee to acquire Corporate Travel Division. Assessing Officer has confused himself with the valuation report of the independent valuer with another report wherein the value of the transferred business had been determined at negative value of Rs. 1.9 million. We find that this valuation report was prepared only for FEMA purposes to justify the determination of price of shares issued by the assessee to its share holders. In so far as the depreciation of goodwill issue is by now well settled by the decision of the Hon ble Supreme Court in the case of Smifs Securities Ltd [ 2012 (8) TMI 713 - SUPREME COURT] wherein the Hon ble Apex Court has held that good will acquired on amalgamation [being the difference between cost of assets and consideration paid] is a capital right and thus eligible for depreciation u/s 32 of the Act. We direct the Assessing Officer to allow claim of depreciation. This ground is, accordingly, allowed. Claim of bad debts - Out of the receivables the assessee was unable to recover Rs. 2.25 crores from certain parties - HELD THAT:- There is no dispute that on the acquisition of Corporate Travel Division, the appellant company also acquired receivables. It is also not in dispute that out of the receivables, the receivables amounting to Rs. 2.25 crores from certain parties could not be recovered. It is a settled proposition of law that to claim bad debt, all that is required for the assessee is to actually write off the debts in his books of account. The receivables written off by the appellant company were erstwhile receivables to Amex duly reflected in their balance sheet and, therefore, it can be safely presumed that the receivables were part of business profits of the Amex. Assessee has successfully discharged its onus and has fulfilled the conditions laid down u/s 36 of the Act. We, therefore, do not find any reason why the write off of bad debts should not be allowed.

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• 2020 (2) TMI 155
  Entitlement for deduction u/s 80P - entities registered under the Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- In view of the latest judgment of the Hon ble jurisdictional High Court in the case of M/s.Swabhimani Souharda Credit Co-operative Ltd. Ors. v. Government of India Ors. [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] wherein held that entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of co-operative society as enacted in sec.2(19) of the Income Tax Act, 1961, and therefore, subject to all just exceptions, petitioners are entitled to stake their claim for the benefit of sec.80P of the said Act. Hence, we are inclined to hold that the assessee is entitled for deduction u/s 80P of the I.T.Act. - Decided in favour of assessee.

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• 2020 (2) TMI 154
  Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.

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• 2020 (2) TMI 153
  Disallowance of project management expenses claimed u/s 37 - Change in method of accounting in respect of project management expenses - Whether expenditure incurred after 01/07//2011 i.e.. after the suspension of the business cannot be capitalized as the property construction was not in existence during this period and there was no work in progress during this period? - HELD THAT:- In this case, there is no doubts with regard to the fact that the assessee has followed a consistent method of accounting for accounting project management expenses in the past, but due to changed circumstances, it has changed its method of accounting from a particular date and such changes was bonafide and need of the hour. AO, as well as the Ld.CIT(A) were erred in coming to the conclusion that the assessee has changed its method of accounting without there being any changes in facts and circumstances and such changes was not bonafide. Hon ble Bombay High Court, in the case of Bajaj Auto Limited vs CIT [ 2016 (9) TMI 1047 - BOMBAY HIGH COURT] had taken similar view and held that the assesee was well within its rights to bring about changes, so long as the assesse adopts such change bonafide and propose to employee the new method regularly. In this case, the assessee has changed method of accounting inrespect of project management expenses from a particular date and said method of accounting has been continued in subsequent years and which has been accepted by the revenue. Change in method of accounting was also supported by a reason of temporarily suspension of business activity due to circumstances beyond the control of the assessee. Therefore, assesee was well within its right to change method of accounting for accounting particular expenditure. The Ld. AO and Ld.CIT(A) without appreciating the fact that has simply rejected the claim of the assessee, without assigning any reasons, how the changed method of accounting was not in accordance with the principles of accounting followed by the assesse. Hence, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) were erred in disallowed, project management expenses claimed by the assessee u/s 37(1) - Decided in favour of assessee.

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• 2020 (2) TMI 152
  TDS u/s 194H OR 194C - short computation of TDS - Payment made to service providers for installation of STB and dish antenna - HELD THAT:- In assessee s own case for AY 2010-11 and 2011- 12, where under identical set of facts, it has been held that service charges paid to service providers is in the nature of works contracts and hence, the assesee has rightly conducted TDS u/s 194C. We are of the considered view that service charges paid to service providers for installation of STB and dish antenna is in the nature of works contract and accordingly, the assessee has rightly deducted TDS u/s 194C of the I.T.Act, 1961. The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the Ld. AO towards short deduction of TDS on service charges u/s 201(1) and 201(1A) TDS u/s 194H - discount offered to distributor/dealers - HELD THAT:- Discount offered to distributor/dealers is not in the nature of commission, as defined u/s 194H of the Act, and the assessee shall not required to deduct tax at source on said payment. The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the Ld. AO towards non levy of TDS u/s 194H of the I.T.Act, 1961 and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue.

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• 2020 (2) TMI 151
  Addition u/s 2(24)(iv) - assessee had received the benefit from a company in which the assessee was a promoter Director - HELD THAT:- As relying on SRI DANDA BRAHMANANDAM AND SRI BATTINI NAGESWARA RAO [ 2019 (10) TMI 833 - ITAT VISAKHAPATNAM] there is no case for invoking the provisions of section 2(24)(iv) of the Act and there is no case for taxing the income under the head income from other sources, accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue on this ground. Deduction u/s 54F - Investment in acquiring the residential house - HELD THAT:- The assessee relied on the CBDT Circular No.667 dated 18.10.1993, wherein, the CBDT clarified that the land is an integral part of the residential house, whether purchased or built. Since the assessee had participated in the VUDA auction for purchase of plot, the intention behind participating in auction is to procure the land and to construct the house. The VUDA neither returned money nor allotted the vacant site, hence, the assessee looked for alternate investment and acquired the new residential house by 31.03.017 for a sum of Rs. 5.79 crores within the permissible period of three years from the end of the relevant assessment year and the balance amount was admitted for tax in the A.Y.2017-18. Since the investment was made for acquiring the plots and construction of house, we hold that the assessee is entitled for deduction u/s 54F. Further, in the instant case, the amount paid to VUDA for acquiring the plots was not returned to the assessee till such time of acquiring the new house. The said amount was remained with the VUDA. The Department also did not place any evidence to show that the assessee had received the money back from the VUDA and utilized for personal purpose. Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue

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• 2020 (2) TMI 150
  Addition on account of unexplained paintings - documentary evidences furnished by the assessee in support of acquisition of paintings - HELD THAT:- Restore the matter back to the file of Ld. AO and direct him to re-appreciate the evidences furnished by the assessee in the light of adjudication rendered by us in the case of Ms. Kavita Singh [ 2017 (12) TMI 581 - ITAT MUMBAI] with a direction to the assessee to substantiate his stand, in this regard. The Ld. CIT(A) has observed that many of the paintings were not reflected as part of stock-in-trade of the assessee. However, we find that the assessee has been saddled with addition on account of unexplained paintings on aggregate basis for various group entities and therefore, in such a case, few of the paintings would not be reflecting in the stock-in-trade held by the assessee. With these observations, the matter stand remitted back to the file of Ld. AO as aforesaid. - Decided in favour of assessee for statistical purposes.

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• 2020 (2) TMI 149
  Claim of deduction u/s.35(1)(ii) - HELD THAT:- This issue of sec. 35(1)(ii) deduction in case of School of Human Genetic and Population Health is no more res integra as per M/S PRAKASH PLY CENTRE PVT. LTD. AND PRAKASH PLY CENTRE PVT. LTD. VERSUS DCIT, CENTRAL CIRCLE-3 (3) , KOLKATA [ 2019 (9) TMI 976 - ITAT KOLKATA] At this stage that the department has come across various additional facts regarding the recipient s settlement petition before the Income Tax Settlement Commission making it clear that it had been providing entities to all donors alike assessee. And also that its registration also stands cancelled. We hold that all these arguments carry no substance since the earlier co-ordinate bench (supra) has already considered all these aspects whilst deleting the similar disallowance. We therefore adopt the above detailed reasoning mutatis mutandis and direct the Assessing Officer to delete the impugned sec. 35(1)(ii) disallowance - Decided in favour of assessee.

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• 2020 (2) TMI 148
  Assessment u/s 153A - Unexplained Cash Credit u/s. 68 - HELD THAT:- Tribunal quashed the orders of both the authorities below holding therein that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment u/s 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also. Therefore, it is clear that no incriminating material was found during the course of search, which could have been utilized for making assessment u/s.144/153A - DR could not controvert the above facts by bringing any cogent material on record. It is also a fact that return was filed u/s.139(1) on 05.11.2008 and the due date of issue of notice u/s.143(2) is 30.09.2009 for A.Y.2008-2009. However, the search was conducted in case of the assessee on 11.04.2012 and the AO framed the assessment u/s.144/153A of the Act on 31.03.2015, therefore, it is clear that the assessment framed by the AO was abated in pursuance to the search. Accordingly, we set aside the impugned order passed by the CIT(A) and quash the assessment framed by the AO u/s.144/153A of the Act dated 31.03.2015. Thus, the legal ground raised by the assessee is allowed. Non considering advance tax payment thereby raising Income Tax demand - HELD THAT:- We have also gone through the ITR Return of the assessee for the assessment year 2013-2014, copies of which have been filed in the paper book at pages 7 to 19 and found that at page No.7, in column 7(a) of the Acknowledgement, the assessee has paid Advance Tax of Rs. 33,33,333/-. We also found from the ITR-4 form in the Schedule IT the assessee has disclosed the advance tax of Rs. 33,33,333/-. However, the ld. AR before us submitted that the same has not been taken into consideration by the AO while computing the income of the assessee. We think it fit to restore this issue to the file of AO to consider the advance tax paid by the assessee after verifying and examining the documents filed by the assessee before us in the form of paper book

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• 2020 (2) TMI 147
  Bogus share application money - Addition u/s 68 - HELD THAT:- In this case, the assessee has filed list of shareholders, copy of share application for, copy of share certificates and form no.2 filed with the Registrar of Companies and also the justification for charging the premium on the basis of the future prospect of the respondent company. But by not accepting the explanation, the AO made addition u/s 68 of the Act. The Hon ble Bombay High Court by relying the decision of Lovely Exports (P) Ltd. [2006 (11) TMI 121 - DELHI HIGH COURT ] upheld the findings of the ITAT that respondent assessee had established the identity, genuineness and capacity of the shareholders who had subscribed to the shares. Similarly in the case of CIT vs. Dwarkadhish Capital Market Pvt. Ltd. [ 2010 (8) TMI 23 - DELHI HIGH COURT] it was held that once the identity of the share applicant has been established by either furnishing PAN or income tax assessment number and proved the genuineness of transactions by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue which has all the powers to trace any person. Addition made by the AO u/s 68 was wrong on the ground that the proviso to section 68 was added by Finance Act 2012 w.e.f. 01.04.2013 which comes in operation from A.Y 2013-14 and on this account also, the addition cannot be sustained. We have also perused the decisions relied upon by the Revenue and found the same as distinguishable on facts. We note that the ld. CIT(A) has taken all the aspects and issues into account while passing his order and, thus we do not find any infirmity or illegality in the order of ld. CIT(A). Accordingly, we uphold the same by dismissing the appeal of the Revenue.

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• 2020 (2) TMI 146
  Assessment u/s 153A - addition without any seized material despite the fact that these are search assessments - HELD THAT:- We find that this issue is squarely covered by the decision of Bombay High court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] . Once, there is no search material or incriminating material found during the course of search, no assessment can be framed under section 153A of the Act. Hence, we allowed these appeals.

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• 2020 (2) TMI 145
  Penalty u/s 271(l)(c) - substantial expansion - claim of 100% deduction u/s 80-IC based on substantial expansion done by it during AY 2011-12 - act of concealment of income or furnishing inaccurate particulars of income - HELD THAT:- Since the quantum additions, on the basis of which the impugned penalty was levied, already stood deleted by the Hon ble Supreme Court in Aarham Subtonics [ 2019 (2) TMI 1285 - SUPREME COURT ] the very basis on which the penalty was levied had ceased to exist. In view of this, the impugned penalty levied by the Assessing Officer is not sustainable in the eyes of law, the same is accordingly ordered to the deleted. So far as the findings of the Ld. CIT(A) that the Assessing Officer has made a observation that the assessee has not proved that any substantial expansion has been carried out, in our view, the said observation of the Ld. CIT(A) is misplaced. We have gone through the order of the Assessing Officer in quantum proceedings as well as the order of the Assessing Officer in penalty proceedings and find that the Assessing Officer has made a general observation by picking up certain lines as such from the order of the Tribunal in the case of M/s Hycron Electronics, Baddi, Solan vs ITO [ 2015 (6) TMI 725 - ITAT CHANDIGARH ] and no separate observation has been made by the Assessing Officer in the case of the assessee that no substantial expansion has been carried out. In view of this, the order of the CIT(A) is not sustainable in the eyes of law and the same is hereby set aside. The penalty levied by the Assessing Officer is accordingly ordered to be deleted. Denial of deduction @ 100% in the assessment year under consideration which is the fifth year of claiming deduction - (A.Y. 2015-16) - HELD THAT:- As laid down by the Hon ble Supreme Court in the case of Pr. CIT, Shimla vs M/s Aarham Subtonics [ 2019 (2) TMI 1285 - SUPREME COURT ] the total deduction period u/s 80IC of the Act will not exceed 10 years from the initial year of setting up / commencement of the unit. To be made more clearer, since the assessment year 2015-16 under consideration is the 10th year of claiming deduction u/s 80IC of the Act, thus, the assessee will not be entitled to claim deduction u/s 80IC of the Act for any subsequent year.

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• 2020 (2) TMI 144
  Expenses on account of fluctuation in exchange rates - AO disallowed expenses by observing that the said sum was spent on the premium for the forex cover and such hedging expenses are not allowable - HELD THAT:- As per proviso (a) to sub-section 5 of section 43 of the Act, the legitimate contract entered to guard against the loss that may arise through future price fluctuations cannot be treated as speculative transactions and are to be treated as regular business expense. Since the bankers act as an advisory agent to the assessee in order to protect them from foreign exchange exposure by using their expertise and these services cannot be obtained by the assessee in the stock exchange where their scope of service is very limited, the Tribunal has consistently allowing the transactions carried out through recognized bank. In the present case, it is also not clear from the orders of authorities below as to whether the assessee has transacted through recognized bank or not. However, no details such as, number of contracts, nature of the contract, details of forward contract entered into, banker details, currency details, another party willing to take a reverse position, which is a pre-requisite of a forward contract, etc. are brought on record while making the disallowance by the Assessing Officer or any relevant detail exists in the appellate order while the ld. CIT(A) held that the disallowance is liable to be deleted. Accordingly, we set aside the order of the ld. CIT(A) and direct the Assessing Officer to pass detailed speaking order by giving all details and valid reason for treating the hedging expenses as a non-allowable expense by affording an opportunity of being heard to the assessee. Appeal filed by the Revenue is allowed for statistical purposes.

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• 2020 (2) TMI 143
  Weighted deduction u/s 35(2AB) - expenditure incurred on in-house research and development facility - HELD THAT:- Prescribed authority viz., the DSIR is the authority in quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No. 3CL. There is no vested right of the tax payer in the procedures. The amendment made in the Income Tax Rules, 1962, which is coming into force on 01.07.2016, whereby, the DSIR is directed to quantify the expenditure incurred on in-house research and development facility by the assessees incurred during the previous year cannot be said to have adversely affected or restricted the substantive right of the tax payer and no prejudice said to have been caused by the said amendment of Income Tax Rules, 1962 to the assessee and in fact, the DSIR, who is a technical body is well equipped to assessee to quantify the expenses incurred by the tax payer on in-house research and development. All reports in Form 3CL shall be issued by the DSIR effective from 01.07.2016 which should include in Part B is to quantification of the expenses incurred by the tax payers in in-house research in terms of section 35(2AB) of the Act. Hence, the contention of the assessee has no legs to stand and is out rightly rejected. Thus, the entire claim of weighted deduction claimed by the assessee cannot be acceded to over and above the restriction made by the DSIR. CIT(A) has rightly directed the Assessing Officer to allow the correct amount of deduction under section 35(2AB) of the Act after taking note of the DSIR certificate dated 16.03.2017. Thus, the ground raised by the assessee stands dismissed. Disallowance under section 14A r.w. Rule 8D - HELD THAT:- Now it is a well settled proposition that in case no exempt income is received during year under consideration, no disallowance of expenditure can be made by invoking provisions of section 14A of the Act. It is a matter of fact that the assessee earned no exempt income during the year under consideration. Further, it is observed that Assessing Officer has not recorded any satisfaction before invoking Rule 8D of the 1962 Rules and has simply invoked provisions of section 14A of the Act r.w. Rule 8D. The Assessing Officer has not analysed modus operandi followed by the assessee in making investments, personnel deployed nor has looked into books of accounts of the assessee to compute expenditure incurred in relation to earning of an exempt income. We find that the in the case of Chettinad Logistics Private Limited [ 2017 (4) TMI 298 - MADRAS HIGH COURT] the Hon ble Madras High Court has held that no disallowance of expenditure under section 14A of the Act can be made when no exempt income is earned by the assessee. Also confirmed by SC [ 2018 (7) TMI 567 - SC ORDER] Thus no disallowance of expenditure by invoking provisions of section 14A of the Act is warranted as the assessee has not earned any exempt income during the year under consideration and hence, the disallowance made by the Assessing Officer under section 14A of the Act stands deleted. - Decided in favour of assessee

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• 2020 (2) TMI 142
  Addition on the basis of the crediting of cash in the bank account - assessee having deposited the amount out of the sale proceeds of the closing stock held by him and out of cash in hand - HELD THAT:- Assessee has submitted to the AO that Rs. 8,77,100/- is the sale proceeds of the stock balance he was having as on 31.03.2009 and balance Rs. 1,22,900/- was deposited out of the cash balance available with him. In this regard, the assessee has also filed the balance sheet with the AO which he has filed along with the return of income for preceding assessment year. Further note that as per the balance sheet as on 31.03.2009 the assessee was having closing stock of Rs. 9,07,250/- and cash in hand of Rs. 2,30,127/-. Thus, the explanation of the assessee regarding this deposit of cash was correct. The Ld. CIT(A) was not justified in treating this explanation as contrary to the explanation given before her. The explanation given before AO as stated in the letter dated 23.11.2017 and the explanation given to the CIT(A) in its submissions is the same. The assessee having deposited the amount out of the sale proceeds of the closing stock held by him as on 31.03.2009 and out of the cash balance available with him as on 31.03.2009, there is no reason for sustaining this addition.

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• 2020 (2) TMI 141
  Condonation of delay - delay of 615 days - communication gaps etc. between Shri D.Uniyal and the erstwhile C.A. - HELD THAT:- Assessee cannot be made to suffer on account of the negligence of his counsel. The said view was reiterated by the Apex Court in the case of Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Bahurao Patil [ 2001 (7) TMI 117 - SUPREME COURT] In the facts of the present case, as set out in greater detail hereinabove where we have accepted the Explanation offered on behalf of the assessee as bona fide and true, we deem it appropriate to also address the response of the ld. CIT-DR who though has not opposed the condonation of delay, however, has requested that the assessee be advised to exhibit and ensure vigilance and alertness towards its rights and responsibilities in its future conduct. We expect the assessee to ensure its effective participation with due diligence in all future actions. Having so observed, the delay is condoned. In terms of the prayers of the parties before the Bench as noted in the earlier paras, the impugned ex parte orders are set aside back to the file of the AO and not the CIT(A) as the parties have highlighted that evidences are not on record as before the AO also, the assessee could not make effective representation due to the illness etc. of the Directors.

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• 2020 (2) TMI 138
  Deduction of interest income from scheduled bank u/s 80P(2)(a)(i) - HELD THAT:- Issue settled by the Hon ble Jurisdictional High Court in the case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] and the assessee is not entitled for such deduction. This proposition was not even disputed by the assessee. Only thing which requires to be done is re-determination or quantification of amount which is to be disallowed out of interest income from the scheduled bank. AO shall work out the net interest income from the deposits with scheduled bank, and thereafter exclude that amount from the computation of deduction claimed under section 80P(2)(a)(i) of the Act. As far as interest income from cooperative bank/society is concerned in view of the decision of co-ordinate Bench, such income will qualify for grant of deduction under section 80P(2)(d) of the Act. The ld.AO shall work out net amount of such interest income, and thereafter grant deduction under section 80(2)(d) of the Act.

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• 2020 (2) TMI 137
  Bogus purchases - assessment u/s 153A - GP Estimation on bogus purchases - HELD THAT:- The assessee neither appeared before us, nor filed any details to prove that findings of fact recorded by the Ld.CIT(A) is incorrect. We further noted that the findings recorded by the Ld.CIT(A) is based on the recommendation of the Task force constituted by the Ministry of Commerce and Industry, Government of India and also, the decision of co-ordinate bench of ITAT, in the case of Renisha Impex Pvt.Ltd. [ 2017 (10) TMI 1509 - ITAT MUMBAI] . Therefore, we are of the considered view that the Ld.CIT(A) was right in estimating 6% gross profit on alleged non genuine purchases and further allowed deductions towards gross profit already declared by the assessee for the relevant period .

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• 2020 (2) TMI 135
  Difference in receipts shown as per books of accounts and as per AS-26 - gross revenue under Facility Income - As far as the Assessee is concerned, the receipts of rents as recorded in the books of accounts is in consonance with the agreement between the assessee and the lessee - HELD THAT:- Assessee firstly held that the assessee has done all what best it could do to discharge its onus/burden which lay under the provisions of the 1961 Act by submitting reconciliation statements as well explaining the reasons for differential between the income as is reported in Form No. 26AS information as per the data base maintained by the Income-tax Department and the income as is reflected in its books of account. The assessee has discharged its primary onus/burden and the assessee could not be asked to do impossible. Secondly the Tribunal held that there could be differences in the accounting policy followed by the taxpayer and its clients who have deducted Income-tax at source on behalf of the taxpayer as well wrong mention/punching of the permanent account number of the tax payers by the clients while filing the TDS returns with the Department. One of the reasons for differential could be that the clients have deducted TDS on the gross amount inclusive of service tax while the income is reflected by the taxpayers exclusive of service tax. Thirdly, the tribunal held that the assessee has no control over the data base of the Income-tax Department as is reflected in Form No. 26AS and at best the assessee could do is to offer bona fide explanations for these differential which the assessee did in this case during the appellate/remand proceedings. Fourthly, it held that the Income-tax Department has all the information and data base in its possession and control. The learned Commissioner of Income-tax (Appeals)/Assessing Officer ought to have conducted necessary enquiries to unravel the truth but asking the assessee to do impossible is not warranted. The tribunal finally concluded that no additions to the income are warranted in the hands of the assessee owing to differential in income based on Form No. 26AS and the income as is reflected in the books of account maintained by the assessee - See TUV INDIA PVT. LTD., C/O KALYANIWALLA AND MISTRY LLP VERSUS DCIT 15 (3) (1) , MUMBAI [ 2019 (8) TMI 1050 - ITAT MUMBAI] - the impugned addition cannot be sustained and the same is directed to be deleted. The appeal of the assessee is accordingly allowed.

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• 2020 (2) TMI 134
  Chargeability of interest u/s 234B in the case of non-resident - HELD THAT:- Delay condoned. Leave granted.

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• Customs

• 2020 (2) TMI 175
  Suspension of CHA license - alleged forgery by staff of the petitioner of the signature of the clerk of the Container Freight Station - regulation 20 of CBLR - HELD THAT:- The issue decided in the case of SANTON SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2017 (10) TMI 621 - MADRAS HIGH COURT] where it was held that the show cause notice issued beyond the limitation period and was not sustainable. There is no justification keeping the petitioners license suspended any longer - Petition allowed - decided in favor of petitioner.

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• Central Excise

• 2020 (2) TMI 174
  CENVAT Credit- input services - renting of immovable property outside the manufacturing unit - place of removal - HELD THAT:- The Commissioner (Appeals) had rejected appellants appeal on the ground that sale of goods that had taken place from the immovable property taken on rent was situated away from the place of removal. Further appellant had acknowledged to have registered as an ISD. Therefore, availing total credit on renting services in the factory was not convincing as the rented premises were used for marketing and sale of goods manufactured in both the units of appellant s factory. Also, appellant had replied to the query of the respondent department concerning its registration as ISD in which case, as an input service distributor, it had the discretion to distribute the inputs but the Commissioner (Appeals) had not believed its reply by observing that appellant was using the rented premises for sale of goods and marketing of products being manufactured in two units of Appellant and such issue of ISD registration was not agitated in the show cause notice. What is more important is that the Commissioner had accepted the Appellant s contention that appellant was using the rented premises for marketing purposes which is in conformity to Rule 2(l) of Cenvat Credit Rules that clearly covers advertisement or sales promotion within the definition of input services. Therefore, appellant is eligible to avail the credits and its specific non-reflection in ER-1, could be due to non-availability of such specific narration in the format meant for filing of ER-1 returns itself. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 173
  CENVAT Credit - duty paying invoices - credit denied on the sole ground that the invoices issued by the service provider are not in the name of the appellant but in the name of the principle manufacturer - HELD THAT:- The proviso to Rule 9(2) states that credit shall not to be denied on the ground of lack of documents if the particulars with respect to details of service tax payable, description of taxable service, assessable value, service tax registration number of the person issuing invoice and his address which otherwise are available on record. The provision extends power to the authorities to allow the credit in case these details are available in the documents submitted - The documents produced clarifies that all the requisite details as mentioned in the proviso to sub rule 2 of Rule 9 ( as mentioned above ) were made available to the Department while availing the credit by the appellant. In such circumstances, the denial of credit for the sole reason that the invoices issued by the service provider were not in the name of the appellant who was the availing credit is not justifiable. Thus, it stands clarified that the other conditions for availing cenvat credit were fulfilled by the appellant who admittedly had paid the service tax. There remains no more requirement of invoice to be in his name only, Hence order under challenge is held unreasonable passed ignoring the intent of Rule 9 CCR, 2004. Otherwise also, the availability of Cenvat Credit is a substantial relief. The same cannot be denied merely on the ground of procedural lapse. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 140
  CENVAT Credit - by-products/exempt goods - Bagasse, press mud generated during the course of manufacture of sugar, molasses - manufacture of taxable as well as exempt goods - Board s Circular No.1027/15/2016-CX, dt.25.04.2016 - applicability of Rule 6 of CCR - HELD THAT:- The issue is covered by the judgment of this Tribunal in series of cases and also the recent judgment of Hon ble Allahabad High Court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT] Where quashing the Board s Circular for the period after issuance of Notification No.06/2015-CE(NT), dt.01.03.2015, Hon ble High Court observed that Rule 6 of the CENVAT Credit Rules would have no application for reversal of CENVAT Credit in relation to Bagasse. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 139
  CENVAT credit - exempt goods/by-product - Bagasse/Pressmud - period April, 2009 to October, 2010 - applicability of rule 6 of CCR - HELD THAT:- The issue of applicability of Rule 6(1) of CENVAT Credit Rules, 2004 to bagasse/pressmud which emerges during the course of manufacture of sugar and molasses, has been settled taking note of the judgment of Hon ble Supreme Court in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] in favour of the assessee. Appeal allowed - decided in favor of assessee.

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• 2020 (2) TMI 136
  SSI exemption - clubbing of clearances - dummy unit or not - mutual financial dependence over other unit or not - HELD THAT:- The Department has failed to discharge its burden for proving the financial dependence of M/s.Siddharth Plastoware upon the appellant. They have also failed to prove the final product of two of the units to be common. Thus, M/s.Siddharth Plastoware is wrongly confirmed to be the dummy of the appellant by the adjudicating authority below. Resultantly, the clubbing of clearances of two is not sustainable. There is no denial of the Department that individually their clearances are less than 1.5 Crores. Benefit of S.S.I. Exemption, therefore, cannot be denied to them - Otherwise also both the industries fall within the rural area, as is apparent from address that they lie in Khasra No.29 30. Penalty - HELD THAT:- Since demand in question is held unsustainable and that the confirmation thereof has been set aside, there can be no sustainability of the penalty upon Shri Harphool Singh Jhuria the appellant. The amount of Rs. 25 Lakhs as was debited from the appellant s account due to en-cashing of one of the three cheques issued by the appellant has therefore, to be refunded back to the appellant. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2020 (2) TMI 172
  Dishonor of Cheque - insufficiency of funds - service of notice - the legal notice was sent beyond 30 days of knowledge of the dishonour of cheque - HELD THAT:- In the present case, the complainant has already led his evidence and it has come on record that on receipt of the return memo, the complainant immediately got in touch with the accused and on not receiving any satisfactory answer, the legal notice was given on 06.02.2017. From a reading of the above, it is apparent that the legal notice of demand was issued beyond 30 days from the date of the return memo. The complaint is not maintainable and the same is accordingly quashed - application disposed off.

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